The decision was taken in the 1990s, so A320 would have been firmly established. I actually meant that BAe could have found ways to overcharge for & cock-up an A320 conversion. BAe was building A320 wings, so I'm sure it'd have lobbied hard for A320 over B737 as a basis, & for the job, if the MoD had decided to ask for tenders for an airliner-based aircraft.
Fitting a bomb bay has structural implications. Remember, we're talking about relatively high speed pressurised aircraft. The Nimrod bomb bay was in an unpressurised lower fuselage fairing. Of course, it's doable (see P-8, & Airbus proposals), but it's not trivial.
Nimrod MRA4 was (misleadingly) sold as a much lower risk upgrade than any new development. The initial scope of the changes was less than what was finally done.
In hindsight, a new development would probably have been a better choice, but remember the context. You keep assuming perfect knowledge at the time the decision was made. You also forget that there was no modern airliner-based proposal on offer: the MoD would have had to specify that was what it wanted, i.e. a new type. How would that have been sold politically? No RR engine option, either, though RR has a share in IAE.
We can quibble over the Lockheed Electra & Comet. The original Comet was several years ahead of the Electra, but Nimrod was based on the Comet 4, which was pretty much a new aircraft: over 50% heavier than Comet 1, longer, faster, over twice as much thrust, twice the range. That was a touch newer than the Electra.