Originally Posted By: Trav
Check the crankcase ventilation pressure regulating valve,common failure and cost around $90.Some of the failures related to this valve are..
Failure to separate the oil from the gases, instead sending motor oil into the intake. This will cause excessive oil consumption, smoky exhaust, fouled spark plugs, poor running, oily intake, etc.
Air leak - allowing excess, un-metered air into the intake. This can cause a lean condition, misfires due to lean condition,etc.
These things were known for thermostat issues in these years and IIRC was updated,it may be reasonable to swap it out for a upgraded OEM part if the engine still has the original.
1 ltr per 1-1500km is not uncommon in these engines,many people report lower consumption with BMW 10w-60 AKA Castrol RS and later Edge(Euro not U.S. Edge)
Proper ring seal cannot be expected on these engines without being close to operating temperature.A leak down test will probably show results what may seem unacceptable,again the rings need to be sealed so the engine should be close to operating temp.Operating temp can only be achieved with a properly operating thermostat.
Is that valve the PCV valve(oil separator)? Symptoms sound like it would be, changed that out about 1k miles ago. Do you have any more information on the thermostats? I haven't heard anything about bad thermostats on these cars, but its definitely something I'll look into.