loh_jeff,
A 4 pot is a 4 cylinder engine which is found in the E200. Not particularly smooth and is typical of engines found in cars of smaller engine capacities (i.e. 1600cc). The 520i has a 6 cylinder engine and it just happens that BMW makes wonderful inline 6 cylinder engines. Probably the best around! The engine is smooth and creamy.
The 520i does not come with HID/Xenon lights but they are an option which means you will have to pay for them. One spec? I am guessing that you mean that E-classes come in Classic, Elegance and Avantgarde packages and would like to know if the 5 series have the same packages too. No, the 5 only comes with what PML wants to give you, the choice you have to make is with what you want to add from the options list (e.g. Xenon lights and trims). As far as I know from experience after comparing the E320 and 530i, Cycle and Carriage is very stingy when it comes to options.
Have you test driven any of the two cars? You must go to the showroom and have a go.
The E class is a nicer car to sit in while the 5 is a nicer car to drive. I would have preferred a fully kitted out E320 but my dad choose the 530i.