Here are some pics of the car:
It's a 1995 318i with the 1.8L engine and 115k miles. As of right now everything is stock. I'd like to put in a decent sound system and some mods. My overall budget is probably around $800-1000, for right now. Here are some questions I've got:
First of all, is it really even worth it to put money into the engine, considering it's a 318i? Also, with any performance mods should I be worried about the fact that it's got 115k miles? I probably won't be doing any track racing, just around on the streets.
For the stereo, what would you guys recommend doing for the receiver and speakers? Is it possible just to swap the stock speakers (It's got the 2 tweaters in the front doors and the two in the back) for better ones, or completely redo it? I don't need an uber top of the line system, but I'd like something nicer than what its got right now.
What do you guys use for keeping the paint looking nice? It has tons of little scrapes and dings from over the years, expecially on the hood from my dad driving way too close behind a truck on a gravel road

(It's hard to see them in the pic, but it looks bad close up in reality). It also got keyed a few times back when it was brand new.
Anyways, here's what I'm thinking right now for upgrades:
1. Cold air intake. Google turned up
this one, is it any good?
2. New chip. From what I've read,
this one ought to be good?
3. New muffler. I don't think spending $700 on a new exhaust system is really an option. I saw
this muffler on eBay. Would that give me a good sound? Or are there any more reasonable exhausts that I could go for?
4. Sound system. I'm thinking $400 or so could give me a decent upgrade over the stock, any suggestions here?
And finally, how hard are all these things to install? I've done some mechanical work before, but nothing really on cars.
Thanks!