You are absolutely right. Its the oil filter housing gasket that is leaking oil and dripping down. He is charging me $262 for the repair. Is this fair parts and labor price? Thanks

 

I did it in my garage with the help of a friend. It took about an hour. I've replaced the oil filter housing and the heat exchanger gasket. I had to add some coolant too and replace the engine belt because there were lots of engine oil that leaked onto the belt. So if he replaces both gaskets, the belt (if needed) and top off the coolant, I think it's a fair price.

 

He says oil did not leak onto the belt. No need to replace belt. My car is 2006 67,000 miles and the drive belt has not been replaced yet. Do you think I should do it now while he is working on the oil housing gasket? What other parts should be replace to save me time and labor? Thanks

 

I'd have him throw in a new belt and you should be good to go in that area for a while. If he replaces the old belt with a new BMW belt, you should be good for another 60-70k miles, if it's a brand-x then change after 30k miles. The belt mileage change is according to Mike Miller's recommendations.