The Issue : Recently, I noticed a flat spot when I accelerated under heavy throttle at @ 5- 6,000 rpms. It occurred occasionally at first and then got progressively worse. Other than that, the bike ran well. It Idled fine with no surging. Problem only came up when I had a heavy extended throttle pull. That was a few thousand miles ago. Now, the bike was showing crankiness starting, rough idling and just recently surging along with the flat spot.
The Cause (?) : I figured it could be due to any number of things - the plugs, the valves, TB balance, the air filter, the fuel filter and probably a whole lot more but I started with the simple fixes first. I replaced the plugs, fuel and air filters and did a careful valve adjustment and TB balance, none of which helped. So, back to the head scratching.
The Fix : I was reading about the issues others were having with symptoms like mine and discovered that faulty ignition coils were a source for some. Bingo! That was it for me.
Here's a photo of the old and new side by side. Note the grey top on the new coil. Has a different part number also. BMW 12137680644.

Anyway just wanted to pass this on to others experiencing similar issues. Check those ignition coils!