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Looks like someone will have to disassemble your engine and see what repairs would be necessary. Search you tube and see the re-builds of the e46 engine by HPF as reference. The easy fix, for the dealer, is to charge you for a new engine. Find someone local that can repair it...i feel for you, but one should always stay away from Perillo BMW and any of their affiliates. They are pretty shady and it's well known.
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