VANOS mechanical failures...
 

I recently attended a trade meeting and there was a very interesting guy there, selling these O-ring kits, and he had a whole table of various vanos units, on the table, in various stages of parts...
So I spent some time learning about his finds about BMW vanos pistons,
He claims every factory vanos system's pistons sealing o-rings are prone to this problem within 6000 miles, this means you bought your E46 brand new and cause you drive it everyday, you would not notice a small performance decrease each year?...I will tell you what I was impressed when I drove the guys car with a 100K on it, and the seal upgrade had been done, it was a 330 with a std, you could let out on the clutch in first without any throttle and the car would just want to pull away, also you could be on a steep hill in say 3 or 4 and let out on the clutch and be able to give it some throttle and come out of it, The problem lies in the o-ring material used in the pistons themselves, almost like the space shuttle!, wrong material!.
There are two layers of O-rings and inner and outer, if you remove the pistons you will notice some flat o-rings, hard and brittle, this is the outer layer, below that is one more, usually this one has cracked, these are replaced with a viton type seal instead of the inferior buna-n the factory uses, so before you shell out 500-1000 dollars to buy one, look into the option of a rebuild it yourself, they are pretty simple for the DIY, and the kit is cheap. There are no codes set for this, The GT1 cannot see it, it is a mechanical fault.
I will look thru my notes for the guy and you can call him yourself.

Here is the link www.Beisansystems.com
Make sure you check out his forum and engineering data.