I searched...didn't see a thread detailing how to make the combination work. So...
Long story short, the clutch disc splines all sheared off and I lost drive. Never thought 4cyl could have so much fury! :eek:
Time for a new clutch. I've been doing research for quite a while and I'm well aware of the euro non-a/c sprung hub clutch disc. I ordered a clutch kit and found that the pressure plate is quite different from a dual mass. Can't use it. Different mounting bolt diameters/location and friction plate height. There's a thread on here recently with pics comparing the two. The friction disc however is obviously the same diameter, 215mm.
I have a JB Racing ltw flywheel on the car and it's obviously machined to accept a pressure plate for a dual mass flywheel...well here's were it gets interesting.

JB Racing makes an M3 ltw flywheel that will readily accept an M5 sprung hub clutch disc with a stock M3 dual mass pressure plate. You just have to flip the clutch disc around so that the side that says "gearbox side" is facing the flywheel/engine. This is done so that the torsional springs along the center hub don't contact the pressure plate release fingers.
Well guess what! The 318 JBR flywheel is also machined with the same clearances!

I flipped the friction disc around so that the "Getriebe" or "gearbox" side is facing the flywheel/engine. I checked and rechecked the sprung hub-to-flywheel bolt clearances and it came out to 5/32 in. That's a little over 1/8in. I bolted the dual mass pressure plate on and everything works!
The clutch engagement is much smoother. I did notice a tiny bit of driveline loss which is to be expected when going from a solid to sprung hub disc. Negligible decrease in responsiveness but is totally made up for by the smoother engagement and the disappearance of driveline rattle.
Here's what you need:
JB Racing ltw flywheel for an e36 318 (p/n: 520-040-215)
318 Sprung hub clutch disc (p/n: 21-21-1-223-567)
Stock 318 pressure plate for a dual mass flywheel
Stock throw out bearing
BMW won't sell you just the pressure plate anymore. You have to get it through Pelican Parts (p/n: BW-21-21-1-223-326) for $79.55. The clutch disc is $140.50 also through Pelican Parts. Don't do what I did and order the entire single mass clutch kit.
Post up any question you have. Unfortunately I didn't take any comparison or installation pics as I needed to get the car up and running.