your valve lash could have been set too tight not allowing the exhaust valves enough time to cool and they stuck in the guide and the pistons tapped them causing the busted crap. From the pics the block looks fine. New head time for sure at least but the scenerio goes like this. Engine runs although cylinders are dead creating an unusual force on the rod bearings... thus lower oil pressure and worn rod bearings. Soo... you could try swapping a head onto it or... probably for less money get a complete running engine and pop that in instead. The latter is what I would most likely choose.
Good luck with it, be glad it ran as transportation as long as it has.
95 E34 530I V2.37
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