THE "3 CHIRPS BUT CAN'T LOCK/ARM THE CAR WITH REMOTE"....
Problem solved! - I hope this short write up can be of use to others.
The factory installed plug 'n play alarms on E36/7's have a wired piece (separate from factory head unit's wiring harness) It's a plastic square that has a small square opening (big enough to fit your baby finger in.) This opening has 2 little pins sticking down on one end, and a lever-or-sort coming from the other.
A tech at the dealership told me that when the "lever and pins touch, it sends a signal to the alarm saying the stereo has been removed, but when the pins and lever are separated, it thinks the deck is in. In short, I put a rubber plug in the opening to separate the lever and pins and VOILA!!!, the remote locks and arms the car again.