328/323 M52tu engine is the best choice for you IMO as they are contemporary to the year of the car, also less messing trying to retrofit electric throttle.
If she was the later 1.8/2.0 car then i would go with M54 engine.
Are planning to swap just the engine or the full drivetrain? Bear in mind the 318 gearbox may not be up to the job of handling the torque of a 2.8/3.0 engine.