Love the budget approach. The M50B25 turbo is a proven combo — those engines handle boost incredibly well. The CX Racing manifold is decent for the price but check the wastegate flange alignment before installing — they sometimes need grinding to fit properly. The GT35 will make 350hp easily but spool is lazy below 4000rpm. For drift use that is actually fine since you are always in the upper rev range.
Megasquirt MS3 is the right call — the stock M50 DME is ancient and cannot handle boost control, wideband input, or sequential injection properly. The MS3 with the GPIO expander board gives you everything you need. TunerStudio software is free and there are tons of M50 turbo base maps available online.
For the welded diff, make sure you weld it properly — a poorly welded diff can crack the case under stress. Use a MIG welder with proper penetration on the spider gears. Or better yet, find a used E36 M3 LSD for 300-400 EUR — it is a direct bolt-in and much safer than a welded diff for street driving to events.
Built a similar E36 drift car last year. Few tips from my experience:
The Getrag 420G from the M3 is a great swap but make sure you get the correct driveshaft — the M3 driveshaft is shorter than the 325i. You will also need the M3 shift linkage and the reinforced transmission mount. Total swap cost should be around 600-800 EUR with used parts.
For the angle kit, the Wisefab kit is the gold standard but expensive (800 EUR). A budget alternative is the GKTech-style knuckles — they give you 60+ degrees of steering angle for about 300 EUR. Combined with extended tie rods and modified steering stops, you will have plenty of lock for drifting.
Hydraulic handbrake: mount it on the passenger side of the center console and run a separate line to the rear calipers. Do not T into the existing brake line — you want independent control. Wilwood makes a good budget hydraulic handbrake for about 100 EUR.
