Sorry about your circumstances. Nothing that you posted indicated that you filled the radiator (not the reservoir) w/coolant & water after everything cooled off.
To check for a possible oil/water mixture, I've always checked the coolant in the radiator. If it looks "milky" in color, then it has oil in it, and that can be symptomatic of anything ranging from a blown head gasket to a cracked sleeve or more.
You might try and venture to the 5 series forum, as the members there will probably be more up to speed on that engine and can probably offer you more help than those of us here.
http://e39.5post.com/forums/index.php
Good luck!