There is only one code reader that I know of for our early OBD cars.
They aren't cheap if you buy directly from them. Its made by a company called CarSoft, you can google them. I got my carsoft from a website called dealextreme.com. You will need a computer (preferably a laptop) with a serial port for this software to work. If you don't have one, your money just might be better spent hauling your car to someone who can run a scan. Its unfortunate that you live so far away from a BMW dealership as they have the most comprehensive scanners available. But for the money you spend now can possibly save you a bunch of headache down the road when attempting to troubleshoot future problems.
If you buy from dealextreme, the carsoft 6.5 will work with our early OBD computers. I hear the brand new ones off Carsoft web site are best and a bit more comprehensive than 6.5. The dealextreme came with all the cables including ones for your car and for newer OBD II BMW's and including the software. I recommend a laptop with Windows XP as I had trouble getting carsoft software to work on my Vista laptop.
But the guy you talked to is right. The earliest the code scanners at the stores can read is late 97 BMW's.