Please do this at your own risk. I am not responsible if you break anything. End legal mumbo jumbo.
First off, brake fluid is nasty stuff. I don't normally wear gloves, but you'll need them for this. Get safety goggles too. You really don't want this stuff on you. Be careful not to get brake fluid on the paint, it will ruin it. If you do, flush it with a lot of water and wipe it clean. As a matter of fact, keep a big glass of water by you just in case something gets crazy. Also, brake fluid is apparently very appealing to cats and other animals because of it's smell. They eat it and since it's pretty toxic, they die. So, keep you work area clean just in case you cat or dog wanders in the garage from time to time. Do not throw brake fluid in the trash. Take it to your local oil change place for disposal.
Okay, this applies to all the BMW's I've seen, the major variances in being how you get to the master cylinder. Now, I also did this on a car with an automatic transmission so I didn't have to bleed the clutch master cylinder. If you have a manual tranny, and not a handicapped like mine, you'll have to find it because I have no idea where it could be.
Anyway, on an E36, this is where the master cylinder is:
On an E39 (good luck getting to that, you'll have to take off the microfilter to get to it):
And on the early E30:
Okay, once you've located the master cylinder, you'll probably need some brake fluid and the like. I used Bavarian Autosport's Power Bleeder Kit. It came with the pressure bleeder and the catch bottle (VERY convenient!) all for the June special price of $54.50. I got the brake fluid from Pelican, ATE Super Blue DOT 4 racing fluid. If you have gold fluid, it's nice to use blue replacement fluid and vise versa so you can see when you have flushed the system.
First encounter with brake fluid: use the turkey baster. You have to remove the old fluid from the mater cylinder reservoir and replace it with brand new fluid. Place the fluid in a sealable container. I'm pretty sure that you can't throw it away, but even if you could, I wouldn't since it is toxic. Take it you your local oil change place and have them dispose of it.
Now you'll have to attach the power bleeder to the reservoir. Screw it on, fill the bleeder with 1 liter of fluid. Pump up the power bleeder. This is also my only complaint with BavAuto's design. The stroke is to short and it took longer to pump the damn thing up (15 min) than it did to bleed the brakes!
Tada! I finally got it to the right pressure! Which is 20 psi or 1.4kPa. You'll need to keep this pressure throughout the whole process.
Now for the bleeding. You can either jack up the whole car (probably not worth it unless you have a lift) or you can just jack up on wheel at a time. But you need to remember that the proper sequence is right-rear, left-rear, right-front, left-front no matter how you do it.
This is the spot we are focusing on:
What you are going to do is take off the bleeder valve cap. (If you have any missing, you should replace them, it'll help you in the long run.) Attach the catch bottle to the nipple there or have a "friend" sit there with a bottle catching the fluid that spills out. Either way is fine, your call.
From that, you'll loosen the nut on the valve. It's a 7mm nut. Use an open-ended wrench to open the system. Like so:
Fluid will flow out of the nipple into your catch bottle. Watch it change from gold to green to blue. Once it's blue, you can close the bleeder valve with your wrench, disconnect the catch bottle, replace the nipple cover and move on to the next wheel. Remember: right-rear, left-rear, right-front, left-front.
Once you have all the calipers done, you can move back into the engine bay to finish up. You should release the pressure in the system using the air release valve at the top of the bleeder reservoir. Then disconnect the quick release valve the connects the hose to the screw top cap on the master cylinder reservoir. Some fluid will come out, but not much, that quick release valve is liquid tight. From that you can unscrew the screw top cap on the master cylinder reservoir. The reservoir will be pretty full so you will need to take your turkey baster and remove some so you can get the little green thing in and the cap on.
Once you get the cap on, clean up the mess you made and take it out for a drive. You should have slightly firmer pedal feel. Enjoy!