Yes, camber plates are a must for what you're trying to do. The 17x8.5's have a 40mm offset. This is pretty close to ideal in the front with a meaty tire or r-compound (for strut tube clearance purposes) but it's not so ideal in the rear. In the front at that offset a 245/40/17 would fit cleanly with enough camber dialed in. You could even mount a 255/40/17 (a hair oversized on this heavy car, but it's commonly done by E36 and E46 guys on a budget).
The rear is a whole different animal. The 1 series easily has the worst rear fitment of any BMW I can think of. The rear has room for a lot of rubber, but it needs a high offset to fit, which makes it close to impossible to run a square setup without sacrificing tire width.
If you run a 245/40/17 rear tire on a 17x8.5" et40 wheel then you're running a wheel that is 12mm more aggressive then your stock wheels. The stock wheels are conservative, but when you put a meaty tire right out there at the fender lip with an offset like that, then you'll get rubbing. So a rear fender roll will be required. It's one thing to do this with a "show" or "street" oriented tire combo, but for track/autocross we are talking about wide tires that will be flexing to their limit under load and you'll neeed all the room you can get. The problem is you didn't want to roll your fenders you wanted a bolt on setup. If you installed 235's then you wouldn't have rubbing front or rear, but now you're not even coming close to the grip the car really needs. (I run 235/40's on a 2400lbs E30 M3 and I need more grip). Yes you could get around with that much rubber, but it's not even close to optimal.
With an aggressive fender roll the Nitto Sponsored bmwcca club racer is running our 17x8.5's with 255/40/17 NT-01's, so 255's can be run front and rear but it's not even close to being a direct bolt on fitment.
That being said if you want a simple bolt on setup. I would go the 245/40 on 17x8.5" route as all it requires is a rear fender roll. That fender roll allows for more rubber in the rear, which makes it one of the best bang for your buck mods.
As an example of the benefit of rolling: An E36 M3 can mount 245/40/17 on 8.5" square with no rubbing (but its really close in the back). Rolling is needed for 245's or anything wider on a 9" wheel. The guy who doesn't roll his car at all is forced to run the 245/8.5" combo, while the guy willing to roll can mount 255's front and rear on a wider rim. At the track you need that extra rubber (even more so on a heavy car). $100~ for a roll takes that restriction away.
18's are more expensive but an 18x8.5" et45 is available that can be run with 245/35/18's front and rear. a 2-3mm front spacer is needed for strut tube clearance when something like a Hoosier R6 is run in that size, but it's still rotatable which is important. The upside of the 18" squared setup is better sidewall support on a heavy car. The down side is limited availability of 245/35/18's and their price tag vs. the wide range of cheap 17's available.
17x9" square is not at all ideal on the 1 series because the rear fitment issue will be exaggerated. It works up front, but is a major compromise in the rear.