Just sold my e46 M3 a couple weeks ago. Agree with Hollywood that it is a very fun car and they can be had for around $10K but you better be very mechanically inclined. They are very expensive to keep if you take them to a mechanic. You also need to be prepared to address an aging cooling system (plastic radiator, etc) and a rebuild of the VANOS. These are the main two things that kill these cars. Also have the rear subframe checked out as they will crack if the car has been driven hard on a regular basis.
If I was looking for a BMW in your price range I would look for a an e36 3-series with a five speed. IMO the build quality of the e36 was way better than the e46, they are more reliable, and easier to work on. Good ones are getting hard to find but they are out there if you are patient. Even the 318i is a fun little car to drive. I would try to find a 325/328i though.
