So, I've got this 240D with a 3.69 rear diff, 4spd. When I got the car it came with a 3.07 in the trunk that the PO was going to change to, my speedo reads fast right now as in it reads 60mph I'm actually going 45mph....is it possible that the PO already changed out the cluster to match the 3.07 rear... I already ran out of fingers and toes trying to figure it out...

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Brad

Bunch of old metal, trying to keep it on the road....

It sure sounds that way. The 3.07 Should give you about 20% higher road speed for any given driveshaft RPM.