A critical review of the evidence for M32 being a compact dwarf   satellite of M31 rather than a more distant normal galaxy
  Since Baade's photographic study of M32 in the mid 1940s, it has been accepted as an established fact that M32 is a compact dwarf satellite of M31. The purpose of this paper is to report on the findings of our investigation into the nature of the existing evidence. We find that the case for M32 being a satellite of M31 rests upon Hubble Space Telescope (HST) based stellar population studies which have resolved red-giant branch (RGB) and red clump stars in M32 as well as other nearby galaxies. Taken in isolation, this recent evidence could be considered to be conclusive in favour of the existing view. However, the conventional scenario does not explain M32's anomalously high central velocity dispersion for a dwarf galaxy (several times that of either NGC 147, NGC 185 or NGC 205) or existing planetary nebula observations (which suggest that M32 is more than twice as distant as M31) and also requires an elaborate physical explanation for M32's inferred compactness. Conversely, we find that the case for M32 being a normal galaxy, of the order of three times as distant as M31, is supported by: (1) a central velocity dispersion typical of intermediate galaxies, (2) the published planetary nebula observations, and (3) known scaling relationships for normal early-type galaxies. However, this novel scenario cannot account for the high apparent luminosities of the RGB stars resolved in the M32 direction by HST observations. We are therefore left with two apparently irreconcilable scenarios, only one of which can be correct, but both of which suffer from potentially fatal evidence to the contrary. This suggests that current understanding of some relevant fields is still very far from adequate. 
C. K. S. Young, M. J. Currie, R. J. Dickens, A. L. Luo and T. J. Zhang