By "mayo" on the dipstick I'm assuming you mean there is water in your oil and it looks like a milky sludge on your dipstick. If this is the case you need to find the source and eliminate it. The most common cause I know of is a head gasket leaking. But I'm new to e46's so there could be something else I suppose. In any case the water in your oil in a disaster waiting to happen. This will cause your bearings to fail very quickly, you will end up with bad crank bearings and rod knocking. worst case you could grenade your block. The poor performance sounds like limp mode.
LET ME BE VERY CLEAR, DO NOT RUN THE ENGINE WITH WATER IN THE OIL!!!
Last edited by Ruthlessone3k; 12-08-2012 at 12:04 PM.