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OP,
Knocking has been by far the most popular source for mechanical failure of internal components (piston, rod), or the only source we've known with N55 piston failure.
IAT/Octane can cause knock. But the destructive type of knocking normally happen with a lean burn. Lean burn we often hear with piggyback because of its inability of demanding as much more fuel as boost it adds. With flash, AFR is always normal at low 12s or even high 11s, because every tuner knows that works best for N55. How could lean burn happen in your case then?
Without seeing your log, this is only my speculation:
The IAT goes very high when tracking (AA IC is 10~15F better than stock at best), and BM3 OTS map sets a boost cap. They combined makes the VE(volumetric Efficiency), or simply air volume lower than when it's cold, therefore the fuel pump (to keep the targeted AFR) isn't stressed as much. However, when in-cylinder temp rises up to the point, along with many enough "soft" knocks detected, to protect the engine, DME would go much further than just retarding the ignition timing – it pulls load and dumps fuel, to cool things down. That's when fuel pump isn't able to keep up, and crash when combustion isn't cooled down enough, making a super lean burn.
It sounds like what's intended to save engine destroy it. Yes, because DME has no consideration of the fueling bottleneck when dumping fuel to cool down cylinders.
OP, fighting for warranty seems a long shot. Even with stock car, dealer can deny just because it's used on track. Unless you have reliable connection within the dealer then a different story.
I have to say our engine and DME is so smart that it's very very difficult to kill it. I've heard so many mechanical failures (not internal parts) as a indirect result of a broken 3rd party component. But not that engine itself isn't protective enough to handle the rough conditions.
If you want to continue with the mod game, you can take a look at CP piston, which can lower compression ratio to significantly improve knock resistance. Also mean that you can go higher boost than a normal N55 without having higher octane. It's expensive but OEM piston isn't cheap either.
Or you go conservative and find a way to buy cheap OEM. And use ACN maps and log until you have upgraded hardwares and/or better octane.
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Lemania 2320
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