FR08MEE, Thank for the advice mate - I am totally with you but unfortunately it is my fault as Z4M-2006, is correct because it does say that mods will invalidate the warranty and I suppose they are technically modifications no matter how small.
CornishRob, I am based in Ipswich mate - it is at cooper Ipswich.
There is an update however: After sending my email I received a call today from BMW Customer Service (the same ones that I had previously been told several times were not "customer facing").
After careful consideration they agreed to pay for the work that has been done and the rebuild of the engine. At least now I can take it to a specialist for a top end rebuild.
Unless anyone would like to purchase it in its current state for a potential profit after fixing?
Thanks again everyone for the help - any ideas on the best specialist to do the work? I have had a quote from Geoff Steele and Munich Legends. Any other recommendations?
Thanks again to everyone for all the help and kind words up to now - it really does help.