Hi, I'll have to refresh my own memory about Pin 8, I'm 95% sure that older cars like the e46 need pin 8 to be disconnected. Newer cars need pin 8 active (pin 7 & 8 connected).
You can use a K+D CAN cable on an e46. There is a little utility that you can use to switch between K CAN, D CAN & off. I have a link to it on a few forums just google me & K's can utility.
I find that these interfaces work best on Com 5, maybe it's just me!
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Oh, if the internals of the OBD cable have a white PCB then signs are that it is a poor quality cable. The ones with a green PCB are better made. Do a bit of searching to be sure. However if it works, then it works so don't get too caught up with that.