How familiar is this post?
I had a car 318is towed in the other day. The customer complained that it made some noise that sounded like the timing chain. It stopped running on him.
I started a tear down and found the chain guide rail has busted into pieces and collected in the bottom of the chain case. One of these pieces got into the crank gear and jumped the chain a few teeth. The cams where in time, not the crank. The engine would only turn about 90 degrees and lock solid, back 90 degrees and locked solid.
All 8 intake valves are very bent in that they are all stuck open about 2-3mm and every piston shows contact for every intake valve.
Sounds like you encountered the same exact failure.
As a note, I have noticed these M42's are metal munching machines as they like to eat steel quite a bit. My first experience with a M42 was my buddy's. His oil pressure relief valve seized, lost all oil pressure and the engine grenaded. 3 holes in the block, one in the upper oil pan. The next M42 we purchased to rebuild ate the thrust bearing and the thrust surface of the crankshaft. So a another crankshaft was needed. So we ended up using parts from 3 M42's to rebuild 1. And then the M42 towed in as mentioned above. M42, the metal munching machine. yum yum!

I have quickly learned these engines have 4 common failure modes, 1) Timing component failure 2)Oil pump cavitation failure from loose oil pan bolts 3) Oil pump relief valve failure from seizing 4) Crankshaft thrust bearing failure.