[Jared at Pelican Parts]

the M10 is a great engine but underpowered, very reliable (318i, 2002, 320i)

the M20B27 is again, very reliable but underpowered (325e)

the M20B25 (325i/is) is reliable and makes a nice amount of power just stock (170hp), add a set of headers, no cat, magnaflow, Conforti software, head work and a Shrick cam, and you will easily be pushing close to 220HP for around $2000 or so. I built one. Had no trouble keeping up with the SoCal canyon guys.

You can get either acceleration or top speed in less than an hour by swapping diffs. the 4.10 is nice, but you top out very quick. The low geared ones for the auto "e" cars are great for top end, but slow off the line. the "is" diffs 3.73 are pretty good for all around. You could also source a 320is diff 3.91, but I believe you have to modify the mounting ear.