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Adding a Factory Alarm Unit 

I added a factory keyless alarm system in December, 1997, which  I purchased from The BMW Store in Cincinnatti, OH.  This job is a little more complicated than the CD player install, but is still well within the capabilities of a weekend DIYer.  Don't be scared off by the advertisements that recommend installation by a professional -- it's not that hard.  However, it does involve drilling two holes into plastic parts, so be sure you have the correct size drill bits handy.  One hole is for the sound sensor on the underside of the dash cowling (below the glove box), and the other is for the LED "on" light, which is goes into the blank black plastic filler panel that sits next to the ASC-T switch, just above the gear shift.  Other skills include minor disassembly of the dash, including removal of the OBC and sunglass holder, cutting away of some insulation that's glued to the back side of the dash cowling, and bolting in a siren in the engine compartment.  No need to run any wires, because they're all already there.

Finding the connector that plugs into the control box took a few minutes -- the drawing in the instructions was a bit vague, but after studying it closely I managed to find the right connector wedged up behind the glove box area taped to some other wiring.  With the exception of that one hard-to-follow drawing, the instructions that came with the unit are quite complete and easy to follow.  The entire job took me about two hours.
 
Here is a link to the Unofficial BMW page that has comments from others who have installed alarms in their cars.
 
I like the alarm system in general, except for the way it works if you arm the system and then use your key to unlock the door. As soon as you open the door the alarm sounds. The instructions say that there's a 5 second delay, but actually it's much less than that.  I would have preferred a 10-second delay, or better yet, for the system to disarm when the door is unlocked manually.