E30 318i blown head gasket?

[G-Man]

I'm afraid I've blown my head gasket on my 91 E30 318i M42 motor. A couple of nights ago, the temp gauge goes into the red, I immediately shut the car off and walk to the local grocery store and buy a couple of gallons of water.  I put a gallon into it, drove to my mechanics shop last night where it was running a little rough, we added some more water and antifreeze and bled the cooling system. Today the temp gauge goes up to the red again and I shut the car off and add the second gallon of water.

I'm losing large amounts of water, it's not leaking or dripping on the pavement when I park it, so I'm guessing it leaking into one of the cylinders. When I stand behind the car, I can't smell any antifreeze and no white cloud is following the car which usually happens after a head gasket blows. I'm guessing the head gasket has failed allowing a very small leak into one of the cylinders.

I changed the oil on the 318i this morning and the oil was normal, no milky color at all.

Any ideas of where water is going?  Next step, do a pressure test on the coolant system? I pulled the plugs, nothing out of the ordinary there.

I just installed a LSD on the car a couple of weeks ago, it has Bilsteins, Hella H1/H4, it's a CA rust free car, never been hit so I'm not going to junk it, it's got 152K on the car now.  Here's what the car looks like
http://s6.photobucket.com/albums/y208/bimmerfan02/Gordon/   It has bottlecaps on it now.  The 15" Borbet wheels and NOS Italian 2002 turn signal lights have been sold.