318 needs rebuild!

[al 350i]

i'm usually a regular in the TVR forums but need some advice for a friend. the car in question is a 318i 1999 T reg E46 new shape i think (am i right in thinking it was only the body that changed not the engine). i'm affraid details are a little vague at the mo but can get more if needed, the engine has suffered serious failure (headgasket, damaged valves and more).

is it worth rebuilding? if so can anyone recommend any where in the kent/southeast area who would do a good and trustworth rebuild.

or is it best to replace with a second hand unit? where would be a good place to source a good unit?