Haven't posted for quite some time, but just had a "near miss" trashing my engine due to the oil separator problem and want to relay the info for the benefit of E46 owners living in cold climates who may not be aware of the oil separator problem or who (like me) think it won't happen to your engine. I sent the info of my incident in to Mike Miller at Roundel and his reply is worth posting. I have pasted below my letter to Mike and his response for the info of all on this board:

Hi Mike,

I have a 2000 328i with 109,000 miles on it. I'm writing to encourage any of your readers with a '99 - '04 E46 to service the oil vapor separator if they live in a cold climate and have not had the cold climate oil vapor separator backfitted. I never checked mine, partly because it is so difficult to get at, but mostly because I believed my car to be at low risk of the oil vapor separator plugging due to a long daily commute allowing the engine to warm thoroughly and 5k mile oil changes using BMW/Red Line/Amsoil synthetic oils. Sad story follows.

I started off to work in my 328i which had been sitting over the weekend in well below freezing temperatures. After about 2 miles I got a brief whif of burned oil, unusual for this car because it does not use oil between changes. Two miles later, while in 5th gear at about 1500 rpm, the engine suddenly lost power and I noticed a huge plume of smoke was trailing behind me. Luckily my reaction was to immediately push in the clutch, allowing the engine to stop as I coasted to the side of the road. I suspected the oil vapor separator had frozen/plugged, sucking oil through the engine, so I did not attempt to restart the engine, but had it flatbedded to my independent mechanic. He confirmed my suspicion that the oil vapor separator had sucked a lot of oil into the intake manifold and into the engine. Oil was actually dripping from the exhaust tips when the car was loaded onto the flatbed and I assumed I had trashed the engine. A compression and cylinder leakdown test indicated no permanent damage had been done to the engine - very fortunate for me. My mechanic removed the entire intake system and cleaned out the oil from every place accessible. He estimated close to 4 quarts of oil were sucked into the engine. New spark plugs were installed and the engine started and smoked profusely while burning off the residual oil in the exhaust system for the first 15 minutes (now you can blame me for global warming).

It has now been more than 1,000 miles since the incident and the engine seems to be running normally. I have not received a check engine light, so I assume the O2 sensors survived the mess. One question - is there anything I should be on the lookout for, such as a plugged catalytic converter? Thanks for all the valuable advice you provide Mike, it is appreciated.

Mikes reply:

Actually, the saddest stories of M54 oil separator failure end with a blown engine, secondary to hydrolocking with oil, secondary to oil separator failure. It is quite rare but it does happen, especially in cold climates. Your story is quite common. On the bright side, I haven't heard of any catalytic converter failures following oil separator failure -- they smoke like crazy when you start the engine after the repair, but that goes away and so does the smell.

BMW has a completely revised most of the oil separator parts and every car needs the whole system. But, true to form, BMW didn't tell owners about it and did not issue a service action or provide a secret warranty. The oil separator update with cold weather modification, cleaning out the hole for the dipstick tube, the new dipstick tube, and all the associated hoses (which are always soft and mushy) costs about $450 to $600 depending on where you are and who is doing the work. Every M54 needs it, but it is REALLY important if you live in a cold climate. What happens is that ice forms in the sludge inside the system and completely blocks it, and that's when you get what happened to your car. You're very lucky it didn't hydrolock.

I try my best to print letters like yours once in a while but without a web site presence I am very limited in what I can do to spread the word about the M54 oil separator menace. It was a stupid design and it's a stupid way to loose an engine.

The updated parts and cold weather modification are detailed in BMW Service Information Bulletin 11 08 03.

Best regards,

Mike Miller
BMW CCA Roundel Magazine Technical Editor
[email protected]
[email protected]

Lesson learned: if you live in a cold climate and have not had the "cold weather" oil separator backfitted to your E46, have it done as it is cheaper than repairing your engine if it should freeze and plug during cold weather.