Welcome!
BMW actually uses the factory block and heads for their racing cars (i.e. the ones they race on the Nurburgring, take the 320d for example). These engines are near bullet proof, but if you want to put 400hp into a 323, don't expect it to last 300,000 miles+ like most BMWS.
And Dudesky, his car should be a 2.3L. I think.