The OP has only owned this 2005 vehicle for a year. So there are seven years of use that he doesn't know about (accidents, overheated, low on oil, high revs) As long as the new engine runs well when it is installed, seems to me he comes out even.

What you are asking for in terms of lower miles, insurance warranties, etc, is betterment. Instead of trying to improve his situation, I think that the dealer should make the OP whole. Nothing more, nothing less.

Save the time contacting BMWNA. If the OP wants, he can call the Better Business Bureau. At least it is in their mandate.

Agreed, all I ask is that I have what I went into the dealership in the first place which is a perfectly running car in every way shape and form. what I do expect is that the engine has at least a partial service warranty due to the issue of an engine that is foreign to the car. Or I expect to have full service records for the engine so that I can prove that the engine was treated just as fairly as that engine that I had received in the first place on paper. I will not accept an engine that has significantly more miles than my current vehicle and I will not accept any "as is" properties to a foreign engine being put into my car.

I do trust BMW Northwest but my concern is that if the engine blows after a year of driving it then my peace of mind that my previous engine would've never blown in this situation. There are a lot of "what if" questions but we will see how the end result plays out.

Make sure whatever they put in is a 4.8 engine and not a 4.4. Lots more 4.4's in junkyards then 4.8's.

Reminds of the time a fellow Lotus owner brought his Lotus to the "Dealer" to have engine work perform on it. His car came out minus the twin weber head and a Stromberg head was substituted in its place.

I believe his 2005 4.8i came with a dipstick. If the tech fail to use the dipstick after an oil change to determine the level of the oil in the engine then I would consider that negligence on the tech part.

If this was brought to a court of law I'm sure the jury would find that it was negligence on the Tech and dealer part. The tech for failing to use the dipstick to determine the oil level after an oil change and the dealer for hiring a tech that is incompetent.

In a shop setting, it is not standard practice to check the oil between filling it and starting the vehicle. Unless you are unsure how much oil the vehicle takes.
Working at a dealer you know vehicle D takes X quarts of oil. So you put in X quarts. Start the engine (run for 5 seconds and shut it down), then verify proper oil level.

You guys are way over the top with suggesting he should get a 100,000k warranty.
I would want a 1 year parts and labor but that is pretty standard
And getting a motor near or below current mileage should be do able (but those 4.8is engines are a rare beast)

But as has been pointed out both the used engine and his original engine (before this event) had unknown histories and you never know when something crazy is going to happen inside that engine.

BMW North America and the BMW dealer are two different organizations.
This BMW dealer could have hurt their reputation over this, but in my opinion they are trying to take care of it.
BMWNA in no way is going to take responsibility for this or loose any bit of BMW's reputation. The only thing they might do is call the dealer and see what is going on.

I've always thought when owning a banner , you have to follow certain rules to stay within company's expectations. So I kinda see BMW Canada or USA or NA as watch dogs over dealers....Just my perception maybe!

I have experienced where BMW North America called the dealer and disagreed on a major out of warranty issue and instructed the dealer to do otherwise. That was after all negotiations with the dealer had been exhausted and I still didn't think the dealer offer was fair or reasonable. This was not a dealer error situation.

How many of us would buy this kinda cars with an engine swap.
Seller: Oh , the engine swap was done by the dealer...
Buyer: great and why did they change the engine ....
Seller : oh , just cause they messed up an oil change....
Buyer: Right ....then the engine swap was a success ,,,let me give you 1k more for your X just because of that engine that comes from a junkyard that probably sat there for years .....

OP should ask for more than what he started with just because the value of his car MIGHT be affected and he should get as many parties involved in this situation.....For what he is going through, he should also be compensated in some way. I'm the aggressive type in these kinda things maybe , but I never walked away without being on top in situations like this, especially with BMW dealers.

If it was me I would of told them to keep the X5 and locate me another one in equal or grater condition with the same options and same or less miles. I know in PA if the insurance deems your car totaled you have the right to have them replace the car if you are not happy with there buy off.. It's a fine print but its law in pa. Good luck with what happens but like I said, I would shoot for the dealer to find you another 4.8is and even up trade you.

Everyone is speculating here. I would not want to accept this offer for now until you find out your legal rights and options from your attorney and the dealer before accepting their resolution IMO.