If I remember rightly on these engines the intake is rather restricted based on the 325 (apparently the aim was for mid range torque rather than top end power)and I seem to recall tuners adding the better flowing M3 intake to this block gives a good power gain for a cheapish mod.
The best mods for a car engine are as follows.
Internal work yields the biggest gains, head work like porting polishing and 3 angle valve jobs will maximise the airflow and raise the power.
If you want to go to the max then cryo treat the block, get it rebored and look into blueprinting and balancing as well.
Bigger valves are an obvious addon but not all engines are suitable as it depends how close together the OEM valves are.
A fast road cam (look into the Eurosport 325i cam kit) will yield good power gains, especially in the top end of the rev range. Don't go mad though a profile of up to 270 degrees will give the best gains without the engine becoming cammy.
The most popular power mods are induction kits (which are questionable as power mods but they can sound nice if that is your sort of thing) and sports exhausts with sports catalysts or decats.
To keep the car legal I'd recommend a sports catalyst rather than a decat.
The last mod should always be a remap as this will allow you to fully realise the power gains on offer from your mods.
Adding a supercharger will yield power increases to around 260bhp but this is likely to cost big money.
It's worth having a read of the articles on
www.torquecars.com/tuning/ for more information on these mods and what the terms mean.
Oh and a warm welcome to TorqueCars, nice to have you with us.