So I wasn't 100% sure what the problem was, but turns out I was right. Someone didn't install the pinion shaft seal properly during assembly. The worst part was that it's so obvious the guy/gal was either completely oblivious or they didn't give. a. fuck. at all. Should've pulled the dust cap off before I installed the rack... oh well, lesson learned. Got a regular e36 rack at a local part store (for some reason they couldn't order e46 racks) and installed. Not as quick as I'd like it to be, but goddamn is it nice to have power steering again.

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