Thanks for all the replies so far.
There's definitely oil and coolant mixing, as can be seen from the filler cap, (not quite as drastic as Swiss Tony's yet...) and the amount of sludge that came out of the breather pipes when I took them off do do another job (replacing the front fuel rail after a leak). See pics below:
There is also a lot of sludge inside the rocker cover if I run my finger around the inside of the oil filler hole. So it looks like it's one of the following: 1) IMG 2) Failed Oil Cooler 3) HGF
The next step is to find out which it is, when I get a couple of days when I can go without a car...
I imagine if it's one of the first two, then I will get it fixed - if it's the 3rd, then I will need to consider cost of repairing my engine vs cost of replacement (2nd hand) engine of unknown history vs real cost of replacing the car. It may end up going as spares or repair if the HG has failed
In terms of replacement options - £9k would see me into a 4 year old 320i, which if I kept for 2-3 years would still have about £4k residual value, so my real costs would be financing it (borrowing £5k = £200 a month over 2 years with the other £4k from savings) and running it. This would save £1k a year on fuel vs the ZT (44 vs 25MPG at the expense of only 20 BHP), and £140 on 12 months tax. (call it £100 a month all in).
I've also been spending on average £105 a month (£1800 in 17 months) since I bought the ZT on maintenance (Belts, x4 tyres, rear brakes, x2 MOT's, cooling pack, rear coil springs in the space of 17 months!), before any costs to repair this latest issue are factored in - that would mean I could be in a 7 year newer car of approx the same mileage. Scary maths!
If this was viewed as just a piece of capital equipment, it'd be a no-brainer. But somehow it isn't...
