The head gasket was just replaced as part of the deal. If the head gasket blew wouldnt I have oil in the antifreeze? Where are you located. Thanks for your insight...

A friend just purchased a 1980 E12 M535i. We drove it back to KC from California non-stop. THe first day(1000 miles) went fine, then everything went down hill. We started burning oil, we were getting about 100 miles to a quart and by the end we had NO power when we fed it gas. Today, we pulled the air filter, the bottom 1/4 was saturated with oil, the throttle body had a puddle of oil in it where it connected to the black "tubing" which leads to the air filter box, and all 6 plugs were caked with deposits. We have not done a compression check yet, that's tomorrow. The previous owner (very reputable mechanic) told us it did not burn any oil before. We were told it could be vacuum...
Does anyone have any experience with this occurance?

First let me say I too have a E12 M535i.

On long trips (like across the US) my car uses about 1qt every 1000-1500mi (and I use Mobil 1 synthetic). Which is probably normal for the age of the car. It runs very strong and has 180psi compression.

As for your problem. If the car used 1qt/1000mi when you started your trip and then went down hill.... and the air filter and throttle body car covered w/oil, then you are sucking it from the valve cover. It is possible you blew a head gasket and are now pressurizing the engine internals (w/piston compression) to "push" oil out of the engine into the throttle body via the valve cover hose), or you have been seriously overfilling the engine w/oil?

Check the compression and see if it tells you anything.

WH