Hi pdot. As Azmi318 has quoted my post at the service cost thread, I would also like to point out a few points in case you are not clear.
Engine overheating can cause "water consumption" as the oil cooler is broken and cause coolant to sip into engine, do check your entire cooling system e.g. radiator, fan, belts, water pump, expansion tank, hoses etc as its quite a common problem with the E46. You might end up spending more than me as I have a different problem, more towards the thread starter's experience (very high engine oil consumption, emitting white smoke). Do get it check asap as you might further damage the engine if left unfixed.