For a stock-to-mildly-modified E36 (M3 included) that streets with occasional track days, the sweet spot I recommend is a good OE-style or light stage-1 sprung-disc clutch — Sachs, LuK, or a SPEC/Sachs Stage 1-2. It holds the power and stays civil in traffic.
- Only step up to a Stage 2+ sprung disc once you've meaningfully raised power or you're really thrashing it on track.
- Avoid unsprung/puck ("paddle") discs on a street car — they grab, chatter and are miserable in traffic.
Since you're already in there, I do the rear main seal at the same time, and think through a single-mass flywheel's trade-offs before committing to one Flywheel SMF DMF.
For this you'll want an OE-style or Stage 1 clutch kit (disc, pressure plate, bearing) — I've put them below.