Either plugged heater core or bad heater valve is likely the
culprit. Just resolved this issue on my e30 and can't advise locations
for the e36.

I don't know if the heater valve on this car operates the same as my E32
or not. On the E32 the valve is closed by application of power from the
ECU. So the first step in diagnosing a heater problem is to pull the
connector and check for voltage on the connector pins. That'll tell you if
it's the ECU or the valve/hoses/heater core.

The heater works by routing hot coolant from the engine through an exchanger
(heater core) in the passenger compartment. The heater core warms the air
that passes through it, where that warmed air is delivered to the
passengers.

If there is no heat, then the places to begin looking are with the hoses and
the heater core. Sometimes you can disconnect the heater hoses from the
connection points on the engine and blow water through  them to clear the
gunk and crud out of the heater core, other times this is a complete waste
of time. If you can not clear the gunk and crud out to the point that the
heater begins to work, then you need to replace the heater core.

The water pump also plays a role in efficient heater operatioin. But, if the
water pump was part of this problem, there would be heating problems with
the engine as well as the poor heater performance that you describe.

Hi George,

A couple years ago this happened to my '97 318Ti.  I searched the web and
found the following and it may apply to your car too :

*********************************
. . . . the 318ti has a
manufacturing defect that causes the cable that chooses between hot and cold
to come loose.

There is a service bulletin on the fix, check with your local dealer.   Or,
remove your glove box and the air duct behind it.  On the right side of the
heater box (LHD car) you can see a black cable with a yellow end.  The
yellow end of the cable housing comes loose from it's mounting point on the
side of the heater box.  A short self drilling screw usually fixes it fine.

Basically, even though you have the dial turned to full heat, the mechanism
behind the dash is only selecting half heat.
*********************************

Indeed, this was exactly what my problem was and drilling a tinny hole and
putting a screw just above the yellow piece so it wouldn't slip out worked
fine and it's worked well since.  The only down side is that I had to remove
an air duct ( besides the glove box assembly ) to get in there and work on
it and getting it all back together required much more swearing and cursing
than normal! ;-)

Best of luck!

John L Rice
Drummer@ImJohn.com