Best thing to do is:
1. Replace Brake Pads
2. Replace Brake pad sensors
3. Replace/Flush brake fluid
4. Check rotor thickness.
check out: E36 DIY
for more information.
Ive seen the brake sensors for the E36 at pelicanparts.com
$12 each i think. Some places reccomend to replace them even if the brake light doesnt go on. My car was just inspected at the dealership and i supposely have 5% on my rear brakes but the sensor is not on, so im assuming its broken or the dealership is full of shit. They wanted $300 for a brake job.
I just bought some Hawk HPS brake pads from bimmerworld.com
(best price i could find) for my 94 325is.