Depends on what you are looking for.

Is the BMW a manual? Are you in the market for a manual? There is not doubt that the 325 is a much better "driver's car" in comparison, if this is what you are looking for.

I have the 97 E320 and have no complaints except for the times I miss having the clutch and stick (previous car was a manual). I too looked at the 00 325 at the time and was very impressed with the handling and feel of the car. The car is not as large at the W210 but this can either be a good thing or bad thing depending on your situation.

It's a tough choice, good luck.