bmwkraftur.is

The tuning the BMW 3.0 single turbo 204HP diesel (184HP as well, but let's stick to the last 3.0d that has been fitted into an e46) has some serious milestones:
First, the engine will respond to chipping quite nicely, up to 250 HP. This is the limit of the stock intake/intercooling/exhaust setup.
Intake - just like a gasoline engine, it will benefit slightly from a short-ram induction system. The powerband will shift a bit higher (by some 7-10 HP), however it will also be a bit narrower (full boost comes some 300-500 rpm higher).

Intercooling - the stock I/C will not cope with the mass of air that is being fed into the engine by a chipped engine. We need a big one. 3/5 of the radiator area and 2" thick. The stock visco radiator fan will need replacing for a thin one.

Exhaust - it's a cure for the intake handicap. With the stock turbo, we do not want (repeat: we DO NOT want) to change the downpipe. It would ruin the turbo response provided by variable geometry due to radical exhaust gas pressure change in a widened downpipe. The stock pressure regulation of VTG will not cope with a widened downpipe. Instead, we will want to fit a 3" exhaust, preferably with gutted/removed cats, to remove the quickly-cooling diesel exhaust gases (cooler=slower) from the exhaust. The engine will pull very strong to the redline.

Now we entered the outlaw territory. Such a car is not street legal.

So what? Now, inevitably, another remap comes to summarize all the small improvements. At this stage, the engine will produce 290-300 flywheel HP. If it's enough - stick with it.

If not, source bigger injectors (priceeeeey!) from a 335d plus fuel pressure regulators. Get a new, 255 fuel pump and another remap. You're in 315 hp range. Right on the limit of the engine internals and waaaaaaay overrunning the stock turbo.
These guys http://antandpete.vault5.com/mag0.htm did it more or less that way.
You can upgrade the turbo (if you happen to find a VTG turbo bigger than the stock GT2260V), but some serious internals improvements are a must at this point. Rods, pistons, valvetrain.

Or, swap a 335d engine into the e46. It has already been done in Poland, twice. And yes, one of the engines is chipped from 272 to 350 bhp and over 540 lbs/ft of torque. And yes, there is no need to swap the entire electronics of the car (especially the whole ABS system, which prevented such swaps a year ago) along with the engine.

þar sem hann reykir svo brjálæðislega við fulla inngjöf eftir Mr. X túnið.