I have heard and seen enough...history of an overheat, loss of coolant and big differences in psi on a compression test. You either need to install a used engine OR do a head gasket and possibly some valve work on the head you have. There is chance (25% I think) that head would be too far warped to use. A machinist will tell you this for sure, but if it is warped more than 12 thousandths, it is pretty much unusable.
Estimated costs for the various options are above... A used engine might be a little quicker if time is important.
Forget about torquing head bolts..that was a test BMW & their dealers came up with to sell you a new engine. Just plan on time-serting your block if you pull the head off.