Here is my 2 cents: The M Packages is simply an option, if you want a real M get an M5.
The engines were the same, no differences.
The sports seat is the thing I most like about the M packages. Honestly, I can't give up my heated steering for the 3 spoke non heated sport steering wheel.
Yes, there were some suspension tweeks for the later Ms but honestly with the age of the car now are they relevant? Performance wise, updating with the right aftermarket spring/shock package on any of the E39s will probable yield equal or better handling.
It comes down to the trim and badging, with M badging cheap on ebay, you decide if the M Sport is worth it or not.... it's you money.
'99 E39 540iT