I have started to hear a slight clunking sound when the car first leaves from a stand still and again when shifting into second.... i would assume it does it on every gear change but it is difficult to hear over the engine noise. It is definitly coming from the drivetrain... sounds like slack is being taken up when the rear end loads up on take off. Is this normal for the rear end to make this noise???

They all do that. Do a search for "clunk" in the E46 M3 forum. Sound comes from the slack between the output flange and the half-shafts.

my z4mc did the same thing till i took it to the dealer and they found or wat they said was a stress bar half turn loose and then wen i went to pick it up from them i drove it and it kept doin that same noise....i guess its normal but its ok if it gets too serious it is still under waranty for another 45000 miles

mine does the same thing...sound like crap for a $60k car!!!

mine does the same thing...sound like crap for a $60k car!!!

You get what you pay for. BMW left some slack in the drive-train to facilitate better torque transfer to rear wheels. That's why BMW's drive-train loss is typically 10-12% or lower compared to most other major manufactures of 15-18%.

With performance it comes a price. Porsches and Ferraris that I've driven or rode in all make all sort of ungodly noises in their drive-train.