Well, since you are wanting to work on it today I will offer my opinion on some of the items...

I only set valves when the engine is stone cold. The best mechanics I know of insist on this also...unless it is an actual emergency... and then just to get you home in order to do it cold.It is very hard to interpolate the expansion of the valves and most people don'r really know what temp a warm engine is anyway.. the critical factor being that if you get it wrong you almost certainly will burn up an exhaust valve... very bad kharma....

Playing the odds on the water leak,, very unlikely that will seal it up.... and if you have read the torque reading threads you know that after a bolt has been in a threaded hole for a while you really need to take a tap and run it into it and clean the hole and lightly lub the bolt in order to have confidance in the torque being correct...

Yes, if gunk has built up below the bolt , from years of small water leaking.. then you could break a head bolt and have to go through a lot of grief to get back to zero..

My books do not go back to cover the 1975 so I can't be specific on the other stuff..

However, there is a definite order in which you gradually tighten the bolts to secure the head. I go through the proper order repeatedly at 10 lb increments... but I am compulsive obsessive according to some... .... it only takes 6 minutes longer than other peoples methods and it makes me feel good.

Sorry I don't have more information more specific to you engine, but someone will, and good luck... Greg

1980 240d manual