I would not recommend putting racing pads on a road car. They don't work we'll until they are up to operating temperature. Thus if you need to do an emergency stop and your brakes are cold you won't stop that quickly. I fast road pad will be much better.
However it sounds like your existing braking system is not working as it should. Brake fluid absorbs water over time and is recommended to be changed every 2 years. Personally I change this early. Poor break fluid will give you a sloppy pedal and when it boils you will get no/very little braking affect. To be honest BMW braking parts are good. I would replace the fluid with genuine BMW fluid and change it regularly. You won't boil this if you do that.
It takes a lot to set fire to brakes. I have only done this either on a mountain pass driving to hard down hill and on track after 20 laps of flat out driving in my e30. the mountain pass incident required new disc and pads while the track car recovered when they cooled down. If your brake pads where low they would overheat more quickly.
For what it's worth I would fit some genuine BMW brake pads and flush the brake fluid and replace. I am sure this will give you good brakes.
E90 330i SE Auto Graphite Grey Metalic