There is also the possibility of the oil pump bypass valve being stuck partially open. The oil pump housing is either magnesium or aluminum, and the bypass piston is steel. The steel piston can wear out the bore, so it may get slightly crooked and get stuck. Metric Mechanic has a fix for this. See pages 35 and 36.

Either way, you'll need an engine rebuild. A bad oil pump will reduce your oil pressure, and your engine will wear out more quickly. If your oil pump is still good, then the engine bearings are just worn and bleeding off too much oil. If you let the problem go on much longer, you run the risk of spinning a rod bearing--common on the M3 engine. You'll then need a new crank and one or more connecting rods.

You can do the rebuild yourself--it's not that complicated. You should, however, send your head off complete to get reconditioned. Metric Mechanic does it for about $1000, and I'm sure Turner Motorsport, Mountain Autosport (MASR) and others do it, too. There are a lot of parts in the head, and you probably shouldn't trust just any machine shop to regrind the valve seats with the correct 3 angles. Disassembly and reassembly take some special tools and a bit of experience.

Engine parts you'll need are the head gasket set, block gasket set, timing chain, chain tensioner rails and guides (all), tensioner piston, new pistons, rings, bearings, and probably a few other parts I'm forgetting. You may also want to replace all the crankcase breather hoses, water hoses, belts, plugs, cap, rotor, wires, alternator bushings, and engine and tranny mounts. It all depends on how many parts have already been replaced recently.

Good Luck!
James
james_535@yahoo.com
88 M5
88 M3
83 535i