How much does a salvaged title lower the value of a BMW?

I have a 1997 BMW that someone gave me in lieu of payment for a job. We found out it has a salvaged title. The car fax report states the car was in Houston and then in Mississippi prior to coming to WA State. We wonder since the car was in Mississippi, if it fell victim to Hurricane Katrina, and owner claimed it a loss just to get cash. The car is in excellent condition, except it needs a new catalytic converter. By looking, and driving this car you would never know, but because of that brand on the title, I wonder if we have a worthless vehicle.