E21 brakes were good brakes, for the standards back in the days! So don't expect your nose to hit the windshield as soon as you point at the brake pedal. But it is likely the brakes have fouled internally which is not to be fixed by just bleeding the brakes with fresh DOT4 or the more heat resistant DOT 5.1 fluid (DON'T use any other spec like DOT3 or DOT 5.0!). Hence it can be very worth while to overhaul the brake calipers and especially the fronts, repair kits are available from the dealer or local brake specialist. Please note that on most models, two brands of brake calipers can be applied that each have their specific rebuild kits: Até and Girling.
With Até brakes, the pistons need to be refitted fitted under a 20 degree angle. See image below (taken from factory workshop manual) for details.
1. use DOT4 or DOT 5.1 fluid only, DOT 3 is way too old and DOT 5.0 is a completely different spec
2. qty required is abt 1.2-1.5 litres for a full refresh
Start with the brake where the line has to cover the most distance and work your way back from there, don't forget the bleed screw on the clutch slave cylinder
Be careful with bleeding the usual pedal pumping way: where you had a perfectly functioning master, then after pumping new fluid though you may end up with a master with knackered seals all of a sudden. Cause: "over stroking" them - meaning you put the seals way past where they usually are and dirt or rust buildup rips the seal. That's why I it is suggested to use a pressure bleeder.
Examples: Motive Power Bleeder ; Motive Power Bleeder Pro ; Eezibleed ; Eezibleed Pro (requires compressor)
For more spirited driving, a brake upgrade may be on your wish list:
Starting point: improved brake pads, good experiences with Ferodo DS2500 for road, fast road and trackday use
General topic on brake upgrades and Volvo 240 turbo 4 pot caliper conversion (front): http://www.bmwe21.net/forum/viewtopic.php?f=3&t=756
Wilwood 4 pot calipers (front): http://www.bmwe21.net/forum/viewtopic.php?f=3&t=9043
Upgrade with E30 calipers (rear, if rear discs brakes installed): http://www.bmwe21.net/forum/viewtopic.php?f=61&t=20181