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Tried doing a donut from standing in my e21. It spun only one wheel. This isn't supposed to happen is it?

It seems to lock ok when I come out of a junction with gusto though.

Please excuse my n00bness but this is the first time I have had a clutch type diff. Only ever had helical or viscous types. They always lock up doing the same manouver.. is this diff needing a rebuild?

What fluid did you use? Use mineral SAE90. I wouldn't use semi or synthetic.

Do NOT use LS90 etc

It already had lsd oil in it. Its the diff off Miskys v8.

There's a special oil for bmw lsds, i will give it a change just to be on the safe side.

I didnt think the oil would be my problem?!

Sideloaders don't like LSD oil. BMW actually state SAE90 mineral oil afaik. The clutch plates will lose their grip with wrong oil. If you Google a few threads you'll find people who have had the same issues.