Ok.
You have a few options.
Upgrading the engine, it's best to keep to the available emgines from the E46 series of cars. Going back to E36 will generate alot of mating issues between the older components and those of the E46. Not to mention the issues with retro fitting a E36 gearbox to the E46 chassis.
So, you could install a 3.0 into your car, just like a particular black E46 from BM, and make less power than a SCed 2.5. Or bore out a 2.5 to 3.5 and Super-Charge it, but to do that, you could simply just buy a M3 engine for a little bit more.
For the power you want, 20k isn't going to be enough la.