Here's the latest -

140 thousandths which is plenty. I'm going to run down the procedure as it should be (probably other and maybe better ways but this is how I did it) and then I'll highlight my mistake for anyone that stumbles across this thread in the future. If anything needs to be added or corrected please feel free to do so.
1) With head off find top dead center make a reference mark on your crank. Pistons in cylinders #1 & #4 will be up, #2 & #3 down.
2) Put your clay over valve relief you're checking. Make sure your piston top is clean. You want the clay to stick. Lightly oil your valve face so it doesn't stick. Valve spring of corresponding valve relief should have a light weight checker spring or lifter should be a solid lifter otherwise hydraulic lifter will be compressed and you'll get an incorrect reading.
3) Rotate crank CCW 90 degrees and your pistons will drop so all four are at their lowest point this will prevent any inadvertent valve interference when mounting the head.
4) Throw on your old head gasket and mount your head.
5) Set your cams at top dead center. Front lobes should be facing each other and pointed slightly up, flats in rear should be vertical and parallel on Schrick. Not sure about Cat-Cams and OEM is square as I recall.
6) Lock your cams in place using your preferred method.
7) Now you can safely turn your crank 90 degrees CW to your reference mark.

Install your timing chain, timing sprockets with arrows up, 15 rivets between arrows.
9) Turn your crank CW a few rotations
10) Remove your timing chain.
11) Rotate your crank CCW 90 degrees.
12) Remove your head.
13) Check your clay.
The first time I did this, when I thought I had clearance issues, I reversed steps 10 & 11. That's a no -no.
So now I wait. Why? Because upon closer inspection I found not only had I taken a chunk out of the cam tray but I also cracked it where one of the lifter buckets go. My BMW parts department couldn't find one in the States so it is coming from Germany. I've had parts from Germany in as little as a week up to as long as three. Since I'm waiting I decided to order the timing case from a later euro M42 that replaces the idler wheel with a guide rail. Not sure if it will with the older block but we'll find out and I'll post results.
I also found out that the Schrick buckets are identical to the VW buckets that are a popular swap for OEM.