Just an update, motor has been swapped with an N52B25 import engine. The ECU has been remapped with a 325i map. Considering all the money I spent, I would just recommend swapping out an N52 with a bad block instead of rebuilding the motor. It saves alot of time and money. The car runs extremely well now with no smoking issue. Thank you to everyone for their advice and input, much appreciated guys.
Been over a year now with the new import motor. Just did tappet cover gasket, new plugs as well as an oil service. The car runs extremely well!
Just thought I would share an update after a year had gone by.