Oil smell inside vehicle when running
Then you most likely have an engine oil leak, it could be a minor one but it is enough that it is burning off the exhaust manifold and getting pulled in the fresh air intake for the heater during warm up. Fix the oil leak and it will go away.
On your car 90% of the time it's the VCG or Valve cover gasket. This gets hard and brittle over time and leaks. Easy DIY. http://forum.e46fanatics.com/showthread.php?t=886063
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