Hello Obee,
* BMW m50b25 has VR sensor primary, you seems to have it wired up from a HALL sensor in your wiring diagram, please correct it.
* Correct grounding diagram is number 2.
* IAC valve diodes use the diodes supplied in the RescueKit 2 x1n4007 between pin#2 and pin#1/pin#3 (stripe towards pin#2).
* Assuming you ordered the right type of ecu, no external flyback is needed; if you provide your ecu number i can verify specs for you.
Best regards, Dave