Yeah,that belt groove in the pulley :wow:

I would check if it's the Water Pump gasket that is leaking,I had that on my M62.

I was gong to comment on the worn tensioner pulley too - wow - but it didn't seem relevant.

Re. the leak, isn't the first picture the underside of the power steering pump? If so the leak could even be something as simple as a leaking bleed screw...

Thanks folks for the help. Whats funny is the next morning I was getting some errands done and it started overheating to the point where the gauge was hitting red line and my heater stopped working. I stopped and got it towed to a shop and they said that the water pump was almost hitting the radiator. So......they replaced the pump and the drive belt and noticed the pulley was bad as well. Long story short I am getting it fixed. I wish I would have been able to figure out the problem myself and do it myself and it would have saved me a couple of benjamins but at least it is getting fixed. Thanks again for the help.

No problem. Good thing you shut her down before the red line. I never let any of my Bimmers get above 3/4. They (especially the cylinder heads) are extremely sensitive to overheating. More BMW's end up in scrap yards for this reason than any other.