If you really got your heart set on an "older" BMW, get an E30 M3, 88-91.. NO question, one of the best M cars ever produced.

There is something called the "Rule of 15" when purchasing a used E30 M3 though, whatever you spend on purchasing the car (assuming it hasn't been fully rebuilt recently), plan on spending about 15,000 to make it absolutely PERFECT. Edit: You can find a very good condition one for around 15-20k, that will usually be fine, just be careful. These were EXTREMELY limited run (500 total per model year, I believe) cars - But they are fabulous. I'd love to build one properly like the Euro models one day.

Parts are killer, if you can do your own work though, it's not bad at all. It's also good to know the "best" two parts suppliers in the country that give 25% discount off list price

http://www.s14.net - LOTS of E30 M3 info.