Great engine, love it/hate it styling (I love it), mediocre handling (for a car of this type, you will notice that no one races these). Co-worker has a '99 Z3 M and it has been very reliable, although it drinks oil (expensive if you use the BMW brand).
A few known issues:
1) Problem with rear sub-frame welds breaking (or something like that).
2) Heads cracking (local engine builder showed me several that he has in for repair). This affects all BMW models, not just the Z.
3) Top leaks near the A-Frame. There is an easy fix, however.
Otherwise, I believe they are very reliable. Take care of yours and you should have no problems.
I would have no issue purchasing one. In fact, I almost did but it had an issue with the rear sub-frame.
Got pics?