The m20 is a great little engine in both the e and i form. The gets great MPG but has 50 less HP but more low end torque beacuse of the lower red line. Good mileage, cheap to fix, pretty easy to work on, lots of torque (I don't care about HP) 170,000 is no bigg deal top ends need to be rebuilt normally around 200-250k, bottom ends good untill about 400-500k all assuming the oil level is good and the engine is taken care of. But as stated above change the timing belt it's not hard I can even walk you through it if you need. Also you need to convert to the TORX head bolts because the Hex head bolts snap. Another good thing is the fact that parts are not hard to come buy because there are e30's in junkyard everywhere in 318i,325e/s,325i/is, 325 forms. Also BMP makes tons of aftermarket parts if you really want some preformance.
I don't know which you should do but there is my info on the 325