StuckAgainSteve
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Haven't heard that one, but know they did have lots of problems with some sort of liner coating that broke up stuffing the engine in the 90s. You can't set an honing machine too deep, but you can have the wrong stones in it. Don't know where you got that one from.
The two eras happened to coincide, there were cases of excessive bore wear due to high sulphur-content petrol attacking the Nikasil bore lining, but engines smoking with 500 miles on the clock are not due to that! I actually know someone who had an engine changed in his brand new BMW due to the honing issues. BMW covered the problem up. He didn't know his smoking car (BMW said it was a emissions system problem and kept the car for weeks due to "lack of parts") had been fixed with a new engine until he came to sell it and the AA man spotted the differing engine number! BMW hastily bought the car off him and offered him a new M3 seriously cheap to keep him sweet.