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FWIW - did some reading...
"Sludge is usually caused by a poorly designed or defective crankcase ventilation system, low engine operating temperatures, the presence of water in the oil or crankshaft-induced cavitation, and can accumulate with use. Oil sludge that causes an engine to run poorly or even seize is a rare occurrence and typically happens only when oil changes have been neglected or if the car has been driven extensively with an extremely low oil level."
Personally, I'd find a wrecked BMW and pull that motor versus a new engine.
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