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They all had the problem in '97 - more (archive)
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Posted by RM on August 11, 2001 at 13:11:38:

In Reply to: Catalytic Converter is gone - Warranty problem posted by Paul M. on August 11, 2001 at 11:59:17:

First off, back in '97, I only had 7k or 8k miles on my 540i and I got the "rattles from below" sound.

Dealer said all 97's were doing it because the "pellets" were getting too hot and fusing themselves together. Of course it was replaced immediately without question.

I would push the emissions issue as well. Does your state have emissions testing? Is it still passing with the melted pellets? If so, drop a few drops of motor oil up inside the exhaust and get it retested. They will HAVE to replace the cats if you fail the test. Sneaky, but then their the ones not wanting to help you out with a known problem.

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