Okay, I have revised this guide as I've made some discoveries after setting the car down on the ground and driving a little bit.
First, with the E60 Zimmerman rotor, you may not need to machine the caliper AT ALL. Meaning, not the inside of the caliper well or the mounting tabs/ears. You'll just need to check for yourself as aftermarket rotors have a 1-3mm variance between them. I had my caliper ears machined for F30 rotors, and had to add so much spacer back I think I am at or around the stock ear dimensions. Other people have reported not needing to machine this tab with the E60 rotors, so that makes sense.
Second, I have not finished bleeding the brakes or bedding the pads, but I have noticed that the pad sweep is not centered on the rotor surface.
This is because while I did not need to elongate the knuckle since the rotor diameter is not as wide, the caliper sits closer to the center of the hub and it brings the pad with it:
The solutions to this:
1) Live with it
2) Elongate the knuckle and slide the rotor out
3) Replace caliper bushings with custom eccentric bushes with M10 threads
4) Go back to an F30 rotor and pursue the various options.
There are only three ways to have a correct sweep without elongating the knuckle:
A) Swap 1 series hub and use F30 rotor(Big big pain in the ass)
B) Purchase EOS/ECS style bracket and use F30 rotor(This is the best way to do it)
C) Use custom eccentric bushing in calipers
For anyone being cheap, you're going to have to live with it or use the eccentric bushing or elongate the knuckle.
I suggest to buy the EOS/ECS bracket as the ideal solution, not only do you avoid all these hassles but you can use the factory two piece rotor that will have better performance and will better match the front rotors. But if you are on a budget, just live with it, use the offset bushing or SAFELY elongate the knuckle with the E60 rotor.
For those who don't mind the E60 rotor, thanks to Kosmic for this picture of the offset bushing. This offset is not sufficient however, you'll need to find a machinist that will make these more aggressive.
For those too cheap to buy and install the bushings or switch back to the F30 rotor, thanks to feuer for this elongation diagram. The red talks about using E90 rotors but I don't recommend that since the rotor size is wrong:
Keep in mind, that if you're going to be elongating the knuckle in any of these cases, you may as well not use the time sert anymore and use the factory width M Performance bolt size which is M12. This is why that circle is depicted as larger in the above diagram.