[LuvMyE92]

I would suggest that finding a good independent BMW shop, especially one that deals with modified and/or race cars, would be a better choice than the dealership. Typically (at least in the USA) they default to "replace engine" if they get into any difficult internal issues. If the engine is toast, it's almost certainly cheaper to go find a used one somewhere. The N55 is common enough that a replacement could be sourced.

I suggest sticking with the engine (even though the M2 is not a standard N55) that the car came with, to avoid ECU programming issues, but that's just an uneducated suggestion.

Buying a total loss car is always risky. Back when I had my Chevy SS (Holden VF Commodore) there was a guy on the forum who bought a flood car, and he was able (with mad skilz) to replace the damaged computers, reprogram stuff, fix the other stuff (no engine or transmission internal damage) and ended up saving probably $25K (US) over the price of a dry car. Of course, he can never sell it for much more than he paid, since it is a branded car, but it can be done. Again, you've got to be able to do a lot of it yourself; otherwise you're just writing checks all day long.

I applaud the OP's chutzpah, but it sounds like it's time for a professional diagnosis, not a remote Internet guessing game.

Keep us posted though, we all wish you well!