Originally Posted by Mike Miller
Aside from the increase in size and weight, you'll find the E46 3 Series to be a general improvement in quality and durability over the E36. Build quality and parts quality improved in many areas with the E46, and stayed the same in others -- like climate control modules, climate control final stage resistor units, water pumps and radiators. The E46 has some problems the E36 didn't have, like deteriorating door gaskets up to 2003.
In terms of working on the car or tuning it for performance, there really isn't much difference between a 1999 M3 and a 2002 330Ci.
The benefit of the 1999 M3 would be that it is the last of the E36s, and the last of year of any body style BMW means it is as debugged as it is ever going to be. It also has the benefit of the Motorsport suspension, however the 330Ci sport suspension is also quite good given the right tires.
The 2002 330Ci misses out on some of the improvements BMW built into the E46 starting in 2003, including better door gaskets, better ball joints, larger control arm bushings, and updated rear toe bushings. Of course, all these things can be retrofitted and the 2002 330Ci is clearly a newer car even without the Motorsport tuning of the 1999 M3.
For me, it would probably boil down to what was available, price, whether either car had an interesting or rare color combination, options (preferably the lack thereof), manual gearbox over automatic transmission, mileage, condition, and service history if any (most used BMW have had zero maintenance other than oil changes, and those were done about every 15,000 miles -- way too long).
Hope this helps.