Ok as my story with 545 engine goes I have found out that "engine short block" will be replaced plus whatever else they will find. I tried looking online and I found out that short block is the part of the angine between head gasket and oil pan. Does anyone know more or less what parts are included? I would really appreciate it.

It kinda depends:

Normally a short block icludes the cylinder heads (which sits above the head gasket). With that being said, here is a general list:

Engine block (with pistons, rods, and crank installed)
Camshaft
Timing gears and chain
Cylinder heads (with lifters, rockers, valves, and springs installed)
Harmonic balancer

I'm pretty sure that if the engine includes the heads then it is called a "long block."

You are probably correct since I've heard both terms in the chevy world. Never bothered to learn the exact definition.

I'm curious as to why BMW would replace a block and not the heads in the first place (besides cost).

A short block does not include heads, it is the engine block with all its internal components.

I will have the engine short block replaced this week (3 weeks wait) because one of the cyllinders (#7) was corped (hope I got the word right :) ) the car have 54K miles and it is past warranty. I have a thread about it I will write some more info in it when I get my car back. I also thought they will just take engine out and will put another in as it would be less servive hours (i guess) then replaceing short block only, but I am neither a mechanic nor BMW accountant :)

Did you mean warped? That's definitely a good reason to replace the block. The thing is I'm pretty sure these motors are all aluminum which can warp or crack fairly easy when they get too hot. So if the block is warped I'd be concerned about the cylinder head(s) too.

You're spot on about it being less labor to swap whole engines instead of just the bottom end. But I've read your other post about the cost of a BMW crate motor - so it seems like the accountants are definitely doing their job.

Yeah I ment "warped" Sorry but my english is less than perfect :doh:
I do not know what to do at this point. Should I belive dealer and just wait for them to call me when it is readdy, or go there to take a look at the heads? I am guessing that as much as I want my car to be fixed they want to get money from BMW for doing the job, the more damage to the engine they find the more they get paid for:)

You should plead your case w/corporate BMW - if you can point this out, maybe they will realize it IS cheaper and better in the long run to just swap out the whole engine. Otherwise, I'd try to get s SOLID warranty on the whole engine once its fixed (also easier to do if the whole thing is replaced). it would suck if a few months from now your car starts acting up again and it turns out to be the heads. G/L.

i'd try to get a long block engine with the heads and timing covers installed. it will be way easier to change out and less labor.