When the car is stationary, if I move the steering wheel left to right, I hear a knocking sound. Steering also doesn't feel as sharp as it used to and tends to wander at highway speeds. Does this mean I need to tighten my nuts? The telescoping fuction doesn't work so I assume the nut by the pedals is already overtightened.
When you find out, let me know...
But seriously. It seems an endemic problem in older E34s. There seem to be several sources of steering vagueness. In no particular order, they seem to be the steering box adjustment, the column slide nut, the steering ball joints and the suspension arm rubbers. The message seems to be that the play arises in any and all of them. I've done the steering ball joints, changed and adjusted my steering box, tightened, loosened and tightened again the column nut and now I'm getting to the suspension arms.
To pin down exactly what's occurring in your car, get an assistant to rock the wheel just enough to excite the knocking, and have a damn good look and feel around the underneath of the car while they are doing it. Placing a finger(s) both sides of the item you're investigating is a great way to feel exactly where the play is. Start with the steering column UJ and work your way down the steering system from there.
Sorry there's no magic answer...
Damian