So I found the answer to my questions...

The N62 has 2 diaphragms in the crankcase vent system - one in-line on the vent tube for the right bank and one mounted in the valve cover for the left bank. Looking at BMW's online parts catalog, it seems some N62s have both diaphragm valves located one in each valve cover, but on mine this was only the case on the left side.

The diaphragms were oily and dirty with some chunks of sludge, but no cheese. On the right side, everything looked OK. On the left side (the wet side) the diaphragm was brittle and cracked - a 1" tear in the diaphragm was the obvious source of my unregulated crankcase vacuum and why I was pulling oil into my intake.

Two Bosch replacement diaphragms from NAPA cost me around $60. I'll put them in over the weekend and let you know if it solves the problems.

Glad it was not valve stem seals! Also, REALLY thankful for the helpful member who provided THIS BMW TECHNICAL SERVICE BULLETIN:

http://tsb.deccats.com/tsb-bmw_all-evap.pdf