i turned my 83 318i into an is so i did virtually the same thing, crossmemebers are the same, may need some slight filing but i did it, diff in is is 4.1 but u can use a different one as long as its not too low, tailshaft out of my m10 worked with the m42 so maybe they were all the same, either way can;t be too hard to get one, i hear the e36 m42 harmonic balancer doesn;t thave the 7200rpm problem so that could be insentive to get that, i got the e36 one but mainly coz its newer and has knock sensors which i thought might some in handy for turbo if i wanted too, harmonic balancer thoery is hear say only so take with grain of salt, however, the e36 318is with the m42 has a close ratio gearbox, same first five ratios of that of the e36 m3, and if ur diff is 3.25 which i belive it is or close to i'd go that engine combo with ur diff, needs some driveshaft and shift linkage mods but would make a nice setup. hope that helped.