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White smoke indicates that coolant entered the combustion chamber. It could have been a head gasket, or a crack in the head or block, without seeing it or knowing more details.
BMW engines tend not to be tolerant of overheating; cooling system failures and overheating are often accompanied by major repairs ($$$) While the oil separator issue is a possibility, it wouldn't be my first area of investigation. One option is to buy a used engine from a wrecker. Sorry but I don't know any shops in your area to recommend or point you at. I wouldn't go to the dealer for this, I would look to an independent shop with experience with BMW vehicles. Good luck
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