i am working on a 97 bmw 540i. I did a cylinder leak test and a number 2 cylinder is leaking air out of the exhaust value. this has a self adjusting hydraulic lifter. but in the repair manual it said it might be the lifter it's self or the oil pump o-ring. I did the compression test an all the test is ok. but the cylinder leakdown test shows me the number 2 cylinder is leaking air out of the exhaust value. i was first checking on the car because it was smoking out of the exhaust. it was white smoke i thought it was the head gasket but after all the test it shows not head gasket leak. so what do you think. if you need more information let me know.

Has your coolant level been dropping at all?
What did the plug look like?

There may be a carbon build up on the valve. May be worth doing an air induction service.
I like to use castle hydroblast. You spray it into a vacuum line such as the brake booster line if nothing else is accessible. Full spray for 3 minutes, stall the engine with it or have someone kill it while your spraying. Let it set for a few hours then take for a short drive in low gear, revving the rpms to help break it up. First use Castle cleansrite to clean the throttle bore. Try to get the throttle plates scrubbed good with a brush, while your spraying. Use a rag to wipe the carbon out between brushings. Seafoam is another good product, but smokes a lot.

http://www.seafoamsales.com/motorTuneUpTechGas.htm

http://www.castlepackspower.com/Pages/training/hitech.html

IF you can't find Castle, here is my rep's email:
robw@castlepackspower.com