That e36 looks legit.
Looking good Raj!! LSD will make the car feel 100% different... the control during a slide isn't even comparable. I bought some used spindles off of ebay and had a friend move the tie-rod point closer to the hub, it gave me a bit more steering angle and I'm loving it. Not sure if you've experience the car hit full lock and then continue rotating in to a spin, but with the new knuckles that point is moved further out so it gives you a lot of room to play with.
As far as welding the diff, I've done about 5 events now and haven't had any serious problems. My floor/subframe are reinforced though, and I'm running powerflex rear subframe and rtabs. I've put probably ~20k miles on the car with the welded diff. It's been great except for tight parking lot turns and tire wear lol.