I need to run a 255 wide tire all around.

I have ground control c/o so that will probably help clearance wise.

I also have a front brembo BBK which might cause problems. I'm currently running a 15mm spacer in front in order to clear my 17x8.5 double spokes II (41mm offset)

will the kosei 17x9 fit if they are ever available again?

the kosei's available for the e36 are 17x8.5.

It takes some work but the 17X9 wheels will work but the 255/40R17 is a lot of tire when you use the 17X9. We have a club racer here using the SSR 17X9 with the 245/40R17 Hoosiers all the way aroung no problem.

They will fit, depending on what tire you run. A 245 hoo-hoo is about the same as a 255 Victoracer, and they are about the widest 255 you'll find. Closer to a 275 street tire. It's the hot setup for many of the local SM / BSP M3 racers.

You will probably have to massage the rear fender, and you will probably have to run a 20mm spacer up front.

John V

Not a problem with some persuasion on the rears. Ride height and alignment settings play a factor as well. I'm running GC track/school kit with 17 x 9 (40mm offset) wheels and 255 Victoracers. I had to roll and slightly pull my rear fenders as well as raise my ride height 1/2" from GC specs to eliminate all rubbing in the rear. I didn't roll the front fenders, just a 15 mm spacer. Fronts will occasionally rub on large compression dips so I'll probably roll them at some point. I'm running -3.4 front and -2.0 rear camber. Lots of posts on this in the track, auto-x forum archives. Good luck, each car seems to be a little different.
Couple pics below.

One more

Has anyone here started banging on the inner fender to create more clearance on the body of the car. Im currently running -3 degrees of camber in the rear, and might have to start running spacers back there if I went with wider tires (only 245 SO2's on 17x9 IFG's)

I didn't mention it above but I did have some slight rub on the lower inner rear body. I'll try and find the pics but it just took off the undercoat. A couple minutes with a 2 lb beater fixed the problem. From what I've seen/heard/experienced is that some combination of tire size (and this varies between manufacturer), offset, ride height, camber, toe all play a role in finding the magic spot where you have no problems. Your only talking a few mm's in any direction between problems/no problems. Seems to be quite a bit of variation car to car as well. Some people have issues running one set-up and someone else has none with the same set-up.