How do you change the thermostat and where is it located

The thermostat is located on the top front of the engine. Replacement is a matter of draining the coolant, removing the fan, disconnecting the hoses from the stat housing, removing the housing and replacing the stat. If you search you can probably find a DIY.

Here is a link to a thermostat DIY.

pelicanparts.com/BMW/techarticles/E36-Thermostat/E36-Thermostat.htm

It won't let me post the whole link, you will need to add the traditional beginning part.

One word of caution, if you have to ask where the thermostat is located, just make sure don't get in over your head and you have someone with engine mechanical ability to watch over you or guide you. It's not a difficult job, but I don't want to see you get in over your head. (I would put a smile here, but it also won't let me do that?)