Hey element

I am sorry to inform you that you have a broken motor, if your story is exactly true.
Basically what those of us who think the motor is broken happened is:
You were driving the car
The engine's timing chain broke WHILE YOU WERE DRIVING
You pulled over, chain is broken, engine is too.
Now you have replaced the chain and the engine does not have compression.
The reason why those of us who say the motor is broken think so is because the M42 engine is an interference engine - meaning the valves, when opened, move below the top dead center position (the highest position of the piston), and in a normal operating condition this is fine and great, and the engine can have a higher compression and produce more power that way. However, if the chain is broken, the valves and the piston will move independently, and because the motor was running at a certain speed, the crankshaft was rotating by inertia and the pistons were moving up and down. Also, if you were in gear, the car's movement was adding on to the piston movement since the car's wheels were connected to the crankshaft. In essence, if your valves are bent, that is the best case scenario, as the pistons might be damaged as well.
The reason why we wanted you to take the head off while you were there, is because if your top timing cover was already off along with the intake, the only thing you would need to take off is the 12 exhaust studs and the head bolts, and that would be all you need to do in order to take the head off and look at the valves, etc.
Good news is that there is a good head for sale in Maine for $200 + shipping, and you can try to grab that. Search for a 1991 head from a 318i on
http://www.car-part.comIf you were to replace the head, that would be all you need if your pistons and piston walls look good.
Headgasket set + that head would be all you need in the best case scenario, or if you relaly need a block, I have ea good one right here in MA for sale. two of them actually... pistons and all.
-Artem