I was reading the DIY articles on e36s recently and was adjusting my e-brake so I only have to pull it to about 5 clicks, and once I was done now the handle doesn't even click. It just falls down without locking at all. What did I do wrong that made it this way, and how do I fix it. All I did was adjust the screws on the handle and tightened them.

It sounds like something is causing the ratchet pawl to bind. When you press the release butto it retracts the pawl. A spring is supposed to bring the pawl in contact with the teeth of the sector. If the button or the pawl binds, the pawl won't engage the sector.

When adjusting the parking brake did you first adjust the parking brake shoes in the rear wheels. That's a critical part of adjustment of the parking brake.

No I didn't, I had read that it wasn't necessary to do that. You say it's critical, are you saying that the only way to fix it now is to mess with the shoes in the rear wheels?

The greatest leverage is applied the the parking brake shoes if they are adjusted to just clear the drum. As the shoes wear more motion of the actuator is required which results in a loss of force to the shoes. So yes, if you want the parking brake to work well you adjust the shoes when the lever goes up more than 6 clicks.