Lose some weight first instead of tweaking the motor. I'll bet you could drop 150 pounds easily from the car. I'd ditch the A/C and P/S systems if you have an e30, but the serpentine in the e36 makes that troublesome. Maybe swap the parts over to the early M42 v-belt design. Swap the engine driven fan for an electric one. Drain the coolant and replace it with at least 33% coolant/66% distilled water & some Water Wetter.
Do a chip, do the COP swap, get some nice new iridium plugs and high-quality low viscosity synthetic lubricants in the motor, tranny & diff. Upgrade the injectors to 19# Mustang units, do the hose delete mod, make sure you have no vac leaks.
Once you've done all the easy stuff, get a good compression or leakdown test to see what the motor is worth. Get a wideband O2 sensor and see what the motor is really doing. Tweak the cam timing, adjust the FPR and AFM for max performance.