AdamF

Used to work on them for a living. Most of the real issues have been covered here already.

The rear shock mounts and trailing arm bushings must be attended to. Driving on failed parts here can cause ripped/torn sheet metal on the body where the mountings are. Front suspension is far more robust, though. Ball joints usually last 200k+.

Cooling systems are picky, fresh water pumps and radiators every so often will keep you off of a tow truck though.

Interior quality is spotty, rule of thumb with E36s in general in this department is newer=better.

Everybody drools over the OBD1 cars because they're 'easier to mod' according to the kids on the BMW boards, but smart money is on an OBD2 car with the OBD1 intake manifold. Cheap and very effective if you're looking for a few extra HP. There are tons of software options out there to keep the stock EFI system w/OBD2 in check.

tfm

Agree with all above that my '95 and '99 M3s were great cars; six years of total driving with only a front shock tower failure for outside of routine costs. But, as a previous poster mentioned, a 540i 6spd is a much smooother ride for a DD. The 2003 E39 540i manual had practically all of the running gear of the M5 that year, minus the engine upgrade of course ...an incredible option for a shade over $20K. Of course, you'd want to swap out the diff from the automatic version, etc, etc.

993Brendan

Don't know if you'd consider a 540i6 with gas prices being what they are (not a terrible gas guzzler, but probably not as much of a sipper as an E36 M3), but the prices are in the crapper right now and you can pick up a beautiful one for about $10k (a 97 or 98). Not as nimble as my e36 M3, but it feels much faster and I love the extra room now that I have a kid.

Tim- I spend too much time on Rennlist and no time on the bimmer forums. PM abuot the automatic diff swap if you don't mind.