This has been discussed numerous times on this board, do a search. It is fairly common for the head gasket on the M104 to leak oil, this is noting new. Others have seen head gasket failures in much less than 83k miles. The engine will leak oil down the right side of the engine block. This is just as common an issue as the wiring harness problem.
Look for the leak, they are probably not trying to screw you, yes it will cost over a grand to replace. I believe they do replace the gasket with an updated non-faulty version.