From my brief so far BMW ownership experience if you can't put together one good engine out of those two yourself then just cut your losses. It wouldn't make sense at least for me to pay for labor on a car with sketchy history that you will never get your money out of.

CapeX5 is right, as are all of you who have advised on here. I think if OP does decide to keep it and do the work himself he'll get plenty of help from the members on this forum....every single one of us has diy:ed various parts of this engine and combined we can make a whole one :)

A specialist can be used for certain tasks perhaps but most of the work can be done by oneself to save a few pennies.

The one question you need to ask yourself before making a decision is: How long do I want to keep this car?

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I would take apart the engine in the car and determine if the knocking sound is from timing chain guides like the OP originally suspected. If the guides are bad I would use the new guides that he just installed into the 3500 engine. If the guides are good then that knocking sound could be from something else like a rod knock.

If it is not the guides, I would do a compression check on both engines, paying attention to cylinder no.3 where he saw water coming out. If cylinder no.3 is lower than 10% of all the other cylinders that means rust has formed on the wall of the cylinder or rust have formed on the rings. This can be verify placing squirting some oil into the cylinder or using fogging oil sold at any marine and automotive store to see if the compression goes up. If the 3500 engine shows good compression on all the cylinders I would just do a head gasket job.

The question is do you have the time to do this. I know of many couples who got divorced because the husband was spending too much time in the garage.

+1. Politics, conspiracies, racing stories etc... belong elsewhere.

If I were you I'd demand my money back. The 30 day warranty is irrelevant as the issue isn't a failure of the engine but rather you were sold something that's not fit for the purpose you purchased it for. Unless the seller specifically provided a disclaimer to the condition of the engine they took advantage of you.

Did you pay by credit card? If so I'd dispute the charge. I think you'd have good reason to do so.

Unfortunately, Xoutpost does not have a forum for that unlike Bimmerforums which has their KILL forum.

http://www.bimmerforums.com/forum/fo...4-Kill-Stories

Hindsight is always 20:20. If I bought a used engine, I would have checked the engine compression the day after the engine arrived. Spinning the engine on the starter would have expelled the water and then that would have been the time to bring up the problem with the engine with the seller.

Unfortunately due to family and other commitments he didn't realize there was a problem until after the 30 days warranty had passed. The seller could come back with perhaps the buyer stored the engine outside and water got into the engine because of the storage. Even if the seller was willing to take back the engine, the shipping cost will still be the responsibility of the buyer, and most places have a restocking fee for return items.

The contract between the seller and buyer was for a 30 days warranty on the engine. The warranty period starts the day it was delivered to the buyer. You do not get to rewrite the contract just because you were too busy to work on the car and get the engine installed.

This is not a warranty issue. Even if it were in the 30 day window this would not be a covered issue because water in the engine is not a defect.

Assuming the seller is being honest in his post (i.e. the water in the engine is not of his doing...the amount of water damage I see suggests the water was in the engine for quite some time) then the seller sold him an engine which is not fit for the intended purpose. Unless the seller sold it with the express disclaimer that it was non-functioning they ripped him off. Period.

We don't have the terms of the sale but it's my opinion someone doesn't pay $3,500 for a non-functioning engine. Perhaps in this case the OP did however I would bet against that. If the OP paid by CC then he should immediately contact the CC company and have the charges reversed.

I'd definitely be looking for some sort of resolution other than just "dealing" with it and making 1 engine out of 2. Some sort of compromise from the seller would be in order (so long as the engine was stored indoors or covered appropriately outside), or just file a claim with the CC company... $3500 is a lot for something that can not be just resealed and run. IMO anyway.

The short answer there is not enough information to determine the condition of the engine, draw no conclusions by examining the water, stay optimistic and find out what is wrong. Based on the work you have already done I don't think you need outside help to figure this out.

OP has made no mention the 4.6 engine knocks or that he even has another engine. At this point there is no reason to conclude the engine is shot or can't be fixed at a reasonable cost. All we know is that there is water in one cylinder, could be rainwater for all we know.

As mentioned, do a compression check if you can. If #3 is not fairly consistent with the other cylinders or you can't do a compression check, I would pull the head on that side to get a better look. That way you can confirm if it is a blown head gasket or a cracked head and see the condition of that cylinder and the others on that bank. Compression check is easy to do if you pull all plugs except the cylinder you test. Not necessary to spin the engine, just turn it by hand through 3-4 compression strokes to get a low/high range for that particular cylinder. Before you do that I would turn the engine over by hand 10 or so cycles with all plugs removed.