There's also the question as to why you bought this car in the first place, and why you're paying a mechanic to diagnose and fix your complaint, but it isn't getting fixed. You took it to him twice for the same rattle, he diagnosed it and had you pay him both times to fix it...it's still not fixed. Yet, you go back and ask how much more money you can give him.
As to what to do with it, it's hard to say. A 2002 318i is basically worthless in the US...did we even have the E46 318s here? Think the 325 was the bottom of the E46 line here, but I could be wrong. Either way, you mention rust in structural parts of the car, and brake "pipes"...assume these are "lines" that need replacing...so rust is a definite problem with the car. I don't think I'd be dumping much money into it.
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