If those are the only options you are choosing from you should sell it quickly.

Please elaborate - if I choose the expensive option I feel that I would need to keep the vehicle for some time as it then owes me some service to justify the outlay

If I simply patch it up then I have no option but to trade it as I firmly believe the problem will keep reoccurring - shame as I really like it when its running right and what else would I get thats as good for the cash involved?

If you put a non original engine in it you will not recoup your costs and will diminish the value of the vehicle.

If you simply band aid it (patch it up) it will fail again. It takes some time to make enough condensate to freeze, so we know it wasn't fixed properly. Same will happen again.

If you fix it properly and have the CCV checked regularly you will have your best chance of success IMO but you have said you don't believe that, so you have left yourself no option but to sell it. You could even save the $1000 and sell it as is.

I would be putting in another 4.6IS engine - identical to whats there now, only lower mileage - I cant see how that could somehow devalue it?

Please quantify "some time" to make sufficient condensate? Days/weeks/months? I would imagine that environmental conditions would very much come into play so with the best will in the world I cant see how anyone could give an accurate answer

If I fix the car (including a full clean/check) but leave it as standard like you are suggesting I still view it as a time bomb - as I just said environmental conditions must determine how fast condensate builds so when to clean/service the system would be a calculated guess at best. I suppose I could look out for tell tale signs that something is wrong and react but my wife also drives the car and there is no chance she would notice before its too late - trust me

You say I have "no other option" - that isnt accurate - I can install the part to make the system fully internal but its pricey - I do feel however it is the most robust solution

If I sold the car as it sits ( i.e. not running with a puddle of oil below it) I very much doubt I would get even close to a thousand less than if it was running (I certainly wouldn't pay even close to the same price for an unknown non runner) so for me it makes more sense to do a repair of some kind and make it drivable again

Serial numbers of engine/chassis not matching would devalue it for some. Some may not care.

It would take months to make enough condensate to freeze again, if the thermostat is working. If it was mine I would inspect it annually, and go from there based on what I found. If there was no paste in the separator then there would be nothing to freeze.

How sure are you about that? Even considering the extreme temperatures that Alberta sees? I know I seem like Mr Sceptical but if you're sure simply cleaning/replacing the separator was enough to see me through the winter I would probably trade the vehicle in the summer

I would be pretty sure the thermostat is working as the car gets up to temperature reasonably fast but I notice the oil takes a long time to hit 100 on the dash and I actually think that on the colder days it never fully gets there which makes me wonder if the condensate will return in a week or two

I told you what i would do. I was in Alberta over the holidays. Never worried about our X3. I watched temperatures.

If you are carefully watching temperatures why not just cover a portion of the radiator, a home made winter front? Every truck in Alberta seems to have one. I did when I lived in GP and Edmonton.

It is a good thing you are now thinking about how to get the engine warm, solving the problem, and not just focusing on the condensate freezing, accepting that it will happen.

When I lived in Saskatchewan I saw people who had some mind of blanket on their hood in addition to the radiator cover. I'm guessing it was a low tech way to keep the engine warmer than it'd be without it. If you're going to keep it, an block heater might be good.

Also, another way to help with condensate is when you do a short drive, pop the hood, open the crankcase cap, and let it vent a bit. That way perhaps that moisture won't get a chance to condense. While I was waiting for a chance to do my tstat, tht's what I did, and I stopped getting yellow goop on the cap.

^ that seems logical, that way it has somewhere to escape quicker, which means less condensation.

Heated wrap does not permanently remedy this issue. Had another failure earlier this week when temps were -20 overnight. Thankfully, last occurrence was just a few weeks short of two years ago so this one is on the dealer. And they were kind enough to provide a fairly decent loaner.
Attachment 61858