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Defective pump. Or possible bad oil pressure sensor sending false reading to oil gauge. If oil pump is pumping the oil filter will be warm after running just short time. Last if pump runs off connecting shaft to distributor need to remove dist and verify solid connection. Dist runs off cam and pump runs off connecting rod to dist.
It is located just behind the radiator in a casing that is plastic on top fitted with a plastic bolt. You need a very big spanner to open it. In side it is a cylidrical like oil filter
possibly a problem with the button on the end of the stalk.
sounds like your indicator stalk needs changed out.
I had a similar problem with the other side and my intermittent wipers. changed the stalk and it was all good.
Both E36 and E46 models have oil filter under the hood, towards the front of the block. You will need a special socket to remove the oil filter cap and once it's out, can replace the filter. Make sure to replace the gasket on oil filter cap, it should come in oil filter kit you bought.
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