So I've decided to pull the engine and see what's wrong. Think it's a spun rod bearing. I'll be posting photos of the process for anyone who might be interested. I've pulled the radiator, power steering pump so far. Taking it slow and methodical. Don't want to make any mistakes. Going to pull the tranny too. I'm taking the crank down to Castillo's in La Mirada, CA. Pretty sure it will need welding on one journal. May have to pull the head if the rod is damaged, (they almost always are). If so, I'll do some head work too. Wondering if I should replace the rings while it's apart or leave them alone. Had good compression, no smoke or oil consumption. Stay tuned. This is way more of a project than I want to tackle, but times are tough.

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superb! take lots of pics

I also recommend photobucket.com for posting forum photos, much bigger and much higher qualities.

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1992 850i 6 speed
1991 M3 S54B32 swap
2007 328iT/6 RWD sport wagon
1987 325E 330iZHP engine swap
2004 Vespa 200GT
1976 W115 240D getting a much bigger engine. 5.5L
1997 R129 SL600 5AT