When checking my oil the other day before your post, I noticed it looked all wrong. My dad thought the car was leaking antifreeze and said we would check it in the morning. Yesterday, when we checked the anti freeze, I happened to notice smoke coming out the side of the engine....
I have officially found the problem, a blown head gasket. It is getting antifreeze into the engine and blowing the white puffy smoke out the back..
I fortunately have scrapped together enough money to pay for the service and am happy to report that this 17 year old is keeping his e30! The car is going into the shop for this fix on tuesday and I will also be replacing the rest of the hoses and all of the injectors.
Once this is fixed, I should get the power I'm looking for.