Not the hg
Dawntreader, I've had an engineer review your pictures. His view is that your transmission fluid is leaking into your radiator.
The reason is straightforward - its the colour of the milkshake. ATF is red in colour. When mixed up with coolant, it turns milky brown. Engine oil is either yellow, dark brown or black. When mixed with water, it turns milky black, or milky yellow. And this, I can confirm from painful personal experience.
My engineer suggests that you do the following to satisfy yourself of this diagnosis.
1. Take two transparent glasses. Half fill each with water. Fill up to the brim with engine oil in one glass and atf in the other. Mix it up with a spoon. See what the resulting emulsion looks like. Compare it to your oil spill.
2. Please take a look at the auto transmission dipstick. You'll likely see the same milkshake there.
3. You've looked at the engine's dipstick. No milkshake there.
4. Carry out a compression test on all of your chambers. If the compression readings are within 5% deviation between chambers, then you've got no problems. If there's a cracked head or a bad HG, one, or two adjacent chambers, should show substantially lower readings compared to the rest.
You've probably already removed your HG and can inspect it directly for rupture as well.
Your transmission oil cooler is busted. This is not uncommon for the m20 automatic e34. This will not require you to change your radiator - repeated flushes will clean it out of oil. However, your transmission has given you a potentially expensive repair job. It could be something as simple as replacing seals, it could be something as drastic as rebuilding the whole thing. Expert inspection and diagnosis is required.
You are advised not to drive your car. If you need to drive your car to the workshop as its only a short distance away, make sure the radiator is topped up with new water after being flushed for like 30 minutes, top up your atf fluid through your dipstick (you'll need 2 quarts at a minimum) and drive to your workshop with a beady beady eye on the thermometer all the way. Have extra water and atf oil in your trunk if you need to stop and replenish things. Be prepared for dirty looks as the oil leaks out everywhere.
Please check the situation out and let us know how it goes. Thanks and good luck.
Last edited by robertobaggio20; 03-23-2011 at 07:31 PM.