Last year I bought a '91 318si with 122k miles for $6000. It was in excellent condition (a few dings) and fully serviced. I LOVE IT.
I am ready to do a performance upgrade. Last year, in these pages, someone suggested that the chip upgrade will be greatly enhanced by installing the K&N Cone Filter and also replacing the exhaust. Bavarian sells these items at $249, $154 and $679 (TriFlo), respectively. The questions are: Will they all work smoothly together (does chip need modification for improved air and exhaust)? As the whole package is around $1100 plus installation costs, do I really need all three? Which one or two items should be the priority? What are the latest opinions from the forum?

Also, I thought the 91 318is was an M30 engine, but I see many references in these pages to M42. Which is it??

The 318is M42 engine is a tough one to squeeze alot of power from. A chip will offer some improvement. It's worth doing, but don't expect a major improvement. If you're considering a K&N filter, get the one that fits in the airbox. The open cone filter(though it sounds fast) draws in a significant amount of hot air that is less dense and contains less oxygen than cold air, hence expect about a 15% drop in power below 50mph. The filter and a free flow exhaust will provide power at higher rpms where they will help the engine breath better. If you're like most people you're looking for seat of the pants "pull" which is related to torque. Typically you can get more torque by increasing engine size or by adding a turbo or supercharger. You can experience more of the torque your engine already produces through better gearing. Your car currently runs a 4.10 limited slip rear end. Locate a 4.27LS from a 91 or 92 E30 318ic and you'll experience improvements in acceleration and passing power. Check out "bang for the buck" performance on our web site machschnell.com for more info.