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Wow that's in pretty bad shape! No doubt Mango will pop in here with info on strut failure... but basically at this stage there are a few maintenance items you should be looking at. Let me find the thread for you...
Here you go:
http://forum.e46fanatics.com/showthread.php?t=923563
For the clunking noise, I would start with checking the following:
sway bar end links, ball joints, steering coupling, tie rods, struts...
Eliminate the above for wear / breakage due to mileage and age and go from there.
Do you get any shaking in the steering at speed or feedback in the steering when the clunking happens?
Here you go:
http://forum.e46fanatics.com/showthread.php?t=923563
For the clunking noise, I would start with checking the following:
sway bar end links, ball joints, steering coupling, tie rods, struts...
Eliminate the above for wear / breakage due to mileage and age and go from there.
Do you get any shaking in the steering at speed or feedback in the steering when the clunking happens?
A few people have suggested BMAparts so I will do the same as I was browsing their site and found pricing for shocks and struts to be very good, so you may not have to spend as much as you think.
