It requires disconnecting the one of the abs sensors in the rear. You just disconnect the sensor via the plug which is attached to either the back of the wheel arch or maybe trailing arm. Cant remember exactly and car is not to hand. I'm in the process of doing this swap too. Did you have to do any cutting of plugs and wiring to get it to fire? Mine wont even turn over. Sure the 8 pin plug in beside the ECU is the problem as the 316 and 325 M54 plugs have different wires.
By the car now. It's the sensor on the body of the car. Just follow the wire from the rear wheel. On my last e46 I had none of them attached. Stopped it going into limp home mode after a spin too.
