don't e36 headlights have 4 seperate units like the E30?
Besides that debate, the M42 definately was designed a bit later in the stage of the E30 lifespan, thus it's a bit newer (hydo lifters, I think the M20 uses solids, thus the M42 is easier to maintain).
The M42 is into rev's as the M20's long crank isn't so much, find some nice 318iS that has a LSD in the back, get a chip into it (can you get 93 octane??).
On the other hand, the M20 is smoother, quieter, doesn't need 91 octane and is more midrange torque oriented, thus its nice in traffic.
The early 318i's made from 83-86 or whatever year the M10 based 318 was ended had a older M10 motor from 2002/320i days, it was good, but not as "hot" as the M42.
It was designed and introduced to replace the M10 (it was actually the M40 that replaced it, but the US never saw a M40 based car, thus we got the M42 and consider it the followup motor)
The M20 was designed in the 70's, so it just isn't as modern, it uses Bosch Jetronic (I forget which version) fuel injection, which is older then the modern Motronic fuel injection system the M42 uses.
The Motronic (v1.7 as I recall) is more modern, its DME I / OBD I diagnostics save TONS of time running down strange issues, the M42 has individual coils and are directly controlled by the ECU.
While the chain rarely needs attention, tensioner's need replacement ever 120,000 miles or thereabouts it seems. There is also a guide rail for the tensioner that can be replaced sometimes when needed, if it breaks it usually causes the chain to slip teeth, thus causing havoc. This is probably more rare than a broken timing belt on a M20 however
Overall, both are great, in their own ways!
