OK I've calmed down and I've got time to spare so here goes.
The first step to improving the brakes is to fit uprated pads, braided hoses and a good quality fluid such as Castrol SRF. Braided hoses will give you a much more solid pedal with less travel. The rubber flexy hoses fitted as standard tend to expand when pressure is applied through them resulting in excess pedal travel. For track purposes I highly recommend Pagid RS29 pads. The difference is incredible however they work best once they have built up some heat and can squeel a bit. They can be used on the road but it's easy enough to swap back to your road pads after a track day. If you want more braking then a BBK is the next step but this could cut into your budget quite dramatically.
The entire suspension system is attached to the car using soft rubber bushes, these tent to twist and distort under load ie cornering, braking and acceleration. This results in very unpredictable handling because the geometry of the suspension and steering is constantly changing. Geometry of a race car or setup as it's commonly called is the absolute most important thing that contributes to a cars handling. Once you've found the perfect setup you want it to remain like that so mounting all the components on big soft rubber mountings defeats the purpose. Race cars will use solid mountings for just about everything but this can result in vibration and shock being transmitted through the car depending on what bushes you replace so for street/track use you have to compromise.
The worst bushes are the front wishbone rear bushes and the rear trailing arm front bushes. These can be replaced with firmer or solid bushes without having an effect on ride quality as both items act as pivots for the suspension and don't cause the upward movement of the suspension to transmit in a vertical direction into the body of the car.
It's kinda hard to explain but think of it this way, the front wishbones attach to the car in three places, in two of these places they are bolted dirctly to the chassis and strut without any rubber mounts. The third mounting is a 66mm block of soft rubber. Replacing this mounting with firmer rubber or even a solid mount is not going to change the ride quality, the wishbone simply pivots inside the bush and the vertical movement of the suspension does not travel through it into the body of the car. Some people might tell you that vibration will travel through it but don't forget, the other two mounting points for the wishbone are solid metal to metal joints!
Another thing you can do is fit a limiter kit to the rear trailing arm bushes. This allows the bush to flex to a certain degree but prevents it from going to rediculous levels, these can also be used in conjunction with firmer bushes such as powerflex items. If you fit somthing like spherical bushes such as I have you won't have any flex in the system at all and won't require a limiter kit.
I should probably add at this point that most of my car is mounted on solid bushes and rose joints but I'm trying to compromise and worry about the worst offending items and stay away from areas that would compromise your ride quality, you can always upgrade other parts as time goes on.
Another good one to replace is the lower rear outer camber arm bushes. The upper rear wishbone and camber arm attach to the rear trailing arm at the top and bottom of the hub housing. The wishbone attaches using a spherical bush while the camber arm attaches using a rubber bush. Makes no sense really considering the parts are interchangeable. The M3 CSL is the only model to my knowledge that came with spherical bushes fitted to the top and bottom as standard but you can just buy upper spherical bushes and fit them to the bottom. Simple but effective!
Setup is a very much down to personal preference. Basic settings I use are front toe OUT one degree, rear toe IN one degree front negative 2 degrees camber and rear negative 1.5 degrees camber. I also adjust cornerweights, castor etc but this simply isn't possible on standard suspension so there's no point going over it. Don't be tempted to add too much negative camber to the rears of Z4's because they just don't like it!
Here's a simple and free way to get around 1.5 degres of negative camber on your front suspension.
1. Open the bonnet and jack up the car.
2. Look at the top strut mountings, you'll see 3 nuts and an allen key headed dowel. This dowel is fitted during manufacture to lock the front camber in BMW's standard spec position.
3. Remove the dowel!
4. Slacken off but don't remove the 3 nuts.
5. You will find that the strut tops are mounted using elongated holes in the inner wings, you can now move the top strut mounts inboard and outboard and therefore adjust the camber. Push the strut tops as far inboard as they will go and hold them there while you tighten up the 3 nuts.
6. Do the same on the other side and let the jack down.
Voila! 1.5 degrees negative front camber! You will notice that the dowels no longer fit because the holes are now misaligned so put them somewhere safe incase you want to revert back to the standard setting in the future.
PS2 tyres are brilliant allrounders. Make sure they don't get much above 30psi on the track though or they start to break up. Try PS Cups if you want an even better track tyre. The only problem with these is they don't work properly until they build up heat so be warned!
I assume your thinking of the hard top as a way of improving structural regidity, if so don't waste your money, the same goes for strut braces. On the issue of strut braces, they are designed to prevent horizontal movement across the car however the loads applied to the car through the suspension act in a vertical direction. I could write a long explanation but basically, unless you have VERY solid suspension and a massive roll cage installed your barking up the wrong tree! Chassis bracing would be the way to go. Anyway, that's a whole different story so don't worry about that yet.
I wouldn't bother fitting adjustable anti roll bars yet either, these will cause more trouble than they're worth unless you've fitted adjustable coilovers etc. And by coilovers I mean proper coilovers. I noticed somebody selling a set of "coilovers" recently on this forum where the rear shocks and springs still retained their original mounting points ie the spring and shock are still seperate. This is not a coilover! Anyway, rant over!
The best way by far to improve your track times though is to improve your technique. That only comes through practice. Here's a quick something to improve your braking distances. Always brake using two steps. If you just stand on the pedal you will lock up the brakes or trigger the ABS. The trick is to apply enough pressure to shift the weight of the car to the front then apply full pressure. This gives you much more traction. Another rule is NEVER to brake while cornering, the braking should be over before you turn in. Friction between the tyre and the track is a set amount, if your cornering and apply the brakes you swap some of the friction you were using for cornering to braking, you can't have 100% of both. Have a think about that one!
Hope all this helps.