For the record, the factory MS45 MAF has the air temp sensor built into it. There is no factory air temp sensor in the intake manifold (no need for two). So what MAF are you running with your kit? and what air temp sensor is your kit using?
From the look and description of what happened, I'm GUESSING that there was either massive detonation with the engine, with the resulting retarded ignition timing cooking the exhaust components, or the mixture was just too lean (ie, hot) causing the exhaust components to overheat.
If you like, you can send me your ECU and I can read out the knock adaption tables from it and give you the results. Just cover the shipping.
2001 330ci Turbo