You can probably do a small drop I would say 1.5 inches or so, keep in mind that you might need to roll fenders to keep from rubbing I'm not sure what the tire sizes and such are for the e36. I would suggest an H&R sport or Eibach spring for a small drop that won't hurt the wallet too much. I would also suggest some Bilstein sport or Koni Sport adjustable struts and it should be a pretty good handler.
What do you mean when you say you like to drift, where are you drifting and what is the extent of the drift? Don't be an idiot on the streets. Oh yeah and Grip>Drift!!!!!