M30 head gaskets and heads fail if you just look at them funny, let alone
over heat them.

IF it was running fine before you did the work, and not overheated, youve
probably just disconnected something inadvertantly.

Id first be checking the air flow sensor, then the 2 crank position sensors,
which are connected at the rear of the engine. one is for injection and the
other for spark.

I do not think such a thing exists.  I do not believe you can get any
diagnostic information from the ECU on this car.

So, pull a plug and see if you have spark.  Measure the fuel pressure at
the rail and see if you have fuel pressure.  You're going to have to do
this one step a time just like folks did in the days before computer control.

Okay, did the not starting begin when you replaced the hose and pump?  Or
is it independant?

Incidentally, you really want to use the OEM water pumps on these.  They fail a
lot, but the cheapies fail even more.

Do you have fuel and do you have spark?  If you have neither, check the
crankshaft sensors and make sure the ECU has power.  Check fuses, check
the run relay, etc.
--scott

Is the temperature sensor working and plugged in properly?

Update:
I pulled the BMW's oil drain plug today and about 2 or 3 gallons of water
came out followed by another 2 and 1/2 gallons of water and oil mixture.
You were right about the head gasket.  Tomorrow I will begin to replace
head, intake and exhaust gaskets.  The gasket set is $159 at local auto
parts store.  I hope it's only a head gasket and not cracked cylinder head.
It was surprising how fast the engine would absorb the water.  It must be a
large leak.   How it gets past the piston and rings is even more surprising.
If left overnight it would completely drain of course.  I also wonder what
damage was done by running vehicle with water in oil both driven 20 miles
and idled for 5 minutes.  Bad cam, crankshaft or rod bearings and oil pump
damage?  The 1987 BMW has well over 100k miles.

I have not experienced the BMW way to torque the heads:  43 lb ft and  wait
20 minutes; 57 lb ft and run engine for 25 miles and finally torque 80
degrees from last position (not anymore lb ft measurement).  I don't have
the degree wheel but think I could adapt something similar.  The Germans
definitely do things differently.  This torque is something like my
motorcycle but nowhere near the 95 lb ft of my truck or van nor 105 lb ft
torque of aluminum heads on my Corvette.