The cooling system modifications for the M54 swap are just about the most complicated part of the swap to do in a neat, factory way, which was my goal. So, why was this process so complicated? Mostly because of the differences in the cooling system routing. On the stock E36 6 cylinder cooling systems, there is a coolant outlet at the back of the head, which feeds to the heater core inlet. The heater core then has an outlet, which feeds back to the engine. There is also an expansion tank hose, which runs from the bottom of the expansion tank to a metal pipe under the intake manifold which runs into the engine. So there are 3 ports on the engine side - the heater core inlet/outlet and the expansion tank hose
The M54 has an outlet on the back of the engine that feeds to the heater core, but the heater core on M54's feeds directly to the expansion tank. There is an outlet from the expansion tank which feeds into an inlet port on the M54 engine. As such - the M54 has 2 ports on the engine-side and the routing is changed
The easy but in my opinion improper way to work around this is to run the stock E36 expansion tank and run a hose between the engine inlet port and the heater core outlet port, with a "T" that supplies to the bottom of the expansion tank. I chose a different method and a lot of thought went into this, with many trials and errors... initially I was attempting to fit an E53 X5 expansion tank in place of the secondary air pum
I measured a lot, cut a lot, trimmed a lot, tested it, re-measured, re-cut and then eventually ditched the entire idea and ran a Z3 expansion tank flipped backwards, which is mounted to the firewall (shown below with temporary "brackets"). This also required relocating the positive battery terminal - which was not a big deal. I used rivnuts into the firewall and bolted it into it's new location
The below picture illustrates why I had to flip the Z3 expansion tank backwards. The coolant ports would be inaccessible if mounted in the other orientation
So I had my expansion tank in place, now it was time for hoses. The first hose I ran was the heater core return line - this goes from the heater core (valve) outlet to the upper port on the expansion tank. I had a 90 degree quick-connect style coolant hose connector from a parts car I had which worked perfectly here to look and function factory, while also directing the coolant hose properly towards the firewall, away from where the exhaust headers will be sitting when the engine is installed
I was very happy with how the heater return hose was looking. Not only did it look very much like a factory routing, but it also had the factory quick-connect connector and I designed it to maintain a constant upwards gradient, to eliminate the possibility of air bubbles getting stuck in the hose. Next I took trimmed the E39's heater core return hose (with it's quick-connect hose end) which you can see installed below. It has been rotated since the picture was taken, so it naturally sits in the position where it will be when engine is installed, instead of leaning to the right
The last piece of the puzzle was the expansion tank return line, which supplies coolant to the engine. This particular hose needed two 90 degree quick-connect connectors, which had to be clocked differently than some of the others (they are pinned so they will only sit in one orientation). Luckily, among different BMW engines these connectors are available. I used a combination of N62 X5 and M54 Z3 quick-connect connectors to get all the pieces I needed. At the expansion tank side, I used a 90 degree elbow that angled the hose away from the firewall and around the A/C lines
I also ensured that this hose was a constant height gradient, so there is nowhere for air bubbles to get trapped
You might be wondering, why doesn't the M54 Z3 cooling system work if its an E36 chassis with an M54 installed? The simple answer is that on the E36 there isn't enough room behind the driver's side shock tower to fit the expansion tank and all the other stuff in the way means there isn't any way to get one over there. You could use the stock E36 expansion tank but then you have to bleed it manually and there are other complications with doing it that way
The power steering system does require a little work. The easiest thing to do is to use almost everything from the M54: power steering pump, reservoir, pump supply line and a high pressure supply line from an M54 Z3. I was able to bend an E39 high pressure supply line to fit before I had the Z3 piece. I then ran the rack return line to the stock E36 cooler loop and cut off the crimped end of the return line past the cooler and used a hoseclamp and a power steering safe rubber hose to the power steering reservoir return
Other than that, the stock E36 radiator and Z3 radiator hoses work (they need to be Z3 parts because the engine side is quick-connect, but the radiator uses hose clamps like E36's). For the A/C, just unbolt your stock E36 compressor and compressor bracket, it bolts straight to the M54. I didn't even open my A/C system, no reason to do so