Which diff should i use?

[flyboyx]

Correct, the Z3M and Z3 M coupes had 3.46lsd Torsen style diffs.

3.46lsd are found in E23 7 series. I have two now one behind a s50 powered e30 and the other in a dog legged M3.

mz3's came with a 3.25lsd. that is also what came in my parts car.

[redmist]

With approx 400hp and a zf trans with a 1:1 5th gear, a 2.79 with three clutches works for me.
A e36 diff will work or a large case diff will work with some relatively minor welding/fabrication to the rear crossmember. I put an e36 diff in my ls1 e21 as well as an Audi torsen diff ($50 from a junkyard and indestrucable)in an e12. All depends on how much work you want to do.

[1990m3]

My 3.46 came from a e28 528e

My 3.23 came from an M Coupe

[M-technik-3]

http://www.bimmerfest.com/forums/showthread.php?t=5078&highlight=46+diff+ratio

Came in automatic/steptronic equipped cars...