Turns out I'm not crazy after all.
Thanks fellas for your comments. Did some research the last couple of days and the results will likely shock you. First, I made absolutely sure of the following:
1. The camshaft tip definitely turns independently of its sprocket. It's somewhat stiff but doesn't cause me to over-torque the nut.
2. The camshaft tip can be made to turn by its nut without activating the cam lobes.
3. The camshaft and lobes can be made to turn correctly by turning the crankshaft.
How can this possibly be true? Turns out, the camshaft tip and the camshaft are actually two pieces (the tip is press fitted into the end of the camshaft.) For some reason, mine apparently wasn't machined to the right tolerances. If you tighten the nut on the ATU, the entire ATU moves clockwise relative to the camshaft.
How the previous owner managed to set the timing is anyone's guess.
I confirmed this today by visiting our local BMW shop and told him my dilemma. He thought I was nuts. He brought out an old camshaft and to his surprise, determined that it is a two-piece unit. He tells me he has never seen a cam tip slip in his 30 years in the business and he's changed a lot of them.
While I was there, I bought a shop manual.
One measly toaster
Tin Woodman screwed with this post 02-06-2013 at 04:58 PM
Reason: terminology error