Its quite straight forward. First, you need to figure out what transmission model you have. Not auto or manual, but the actual type of transmission. Their should, key word being should, be a sticker on the bottom of the transmission pan. This sticker will tell you what transmission fluid to use based on which one you have. A green label generally denotes that Dexron III ATF is sufficent.
This is what the sticker on my 98 E36 looks like. Ignore the "lifetime fill" crap.
The vehicle needs to be level, and the fluid needs to be warmed up to operating temp before being drained. Always make sure you can remove the fill plug before you remove the drain plug. The link below is for a good DIY: ATF Change DIY/FAQ (Pictures) - E46Fanatics
This is a thread about how the fluid isnt lifetime. Good read, but not too relevant. The Verdict Is Here: E46 Auto Transmission Fluid Change (Pics and Lab Report) - E46Fanatics
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