Does this indicate a compression leak into the crankcase?
Possibly. Any blow by the piston rings won't help but this is not an uncommon problem.
You have what we call the "turkey gobble" noise. Some say it comes from the engine breather. Yours is the original spring loaded disc valve which was later changed. Another view which I support is that it is the noise of air being sucked in through the crankshaft oil seal.
A couple of easy things you could do before contemplating major engine surgery:
High oil level won't help as it increases crankcase compression/vacuum. Most folk run half way down the dipstick.
Your original disc valve engine breather can be changed for the later reed valve type which is supposed to help. Alternatively BMW initially recommended drilling a small hole in the breather disc say 1 - 1.5 mm (which I have done with some success I now only get an ocassional gobble). This reduces slightly the max. crankcase vacuum which helps the crankshaft seal to cope.
