Anyone have an idea how bad the damage might be? I know it is very tough to guess based on only cursory information and not tearing down the engine. In my prior post I guessed there may be potential cylinder wall damage if indeed the mechanic is right and a wrist pin is damaged. Anyone else agree or disagree?

With a BMW cost mounts fast. (Voice of experience.) Try pricing pistons/rings, gasket set, con rods etc. You'll see why anybody buying it will want to pay little for the lump as the labor/parts to repair price is going to hurt!
Put it on fleabay with a low starting price $400 - $500 and see how it goes. Price the shipping before listing as I'm sure that is going to be a factor. Try somebody like Greyhound as they run cheaper than the usual carriers.

Thanks for all the replies.

I have no idea on the extent of the damage. There are no symptoms other than a slight tapping that trends with the RPMs. Compression is good across all cylinders, so who knows.

I thought about tearing it down to sell off the parts, as I think they are worth more than the engine as whole (vanos, cam, head, etc.). Nevertheless, I just don't have the time and don't really want to hassle with it. I would probably let it go for around $500 just to get it out of the garage. Ebay it is...