I agree w/ somewherinla. That sounds like a nice ride (the 540i). My concern in Toronto would be the winter snow and ice. You would most definitely need a set of good snowshoes with that RWD.

What about an e90 325xi? almost as much HP as the e46 330i, roomier than the e46 also. I test drove one and was impressed. I'm not sure if that is still above your budget, but if you are willing to do with out leather and some toys, you can definitely get one for well under $40k.