BMW E46 330i ZHP Poor Starts/ Engine Shut Off

[gnm330]

Issue: Engine has a rough time starting and cuts out at ~2500 to 2600[RPM].

History: 2004 BMW 330i w/ ZHP package.
Vehicle was running properly on a Friday. I let it sit in above freezing temperatures for the weekend. Went to start vehicle Monday afternoon and would not start at all. Engine flared, but never idled.
A lot of diagnostics have been performed (listed in chronological order w/ 1 being first test):
1.) Battery has been tested and is good
2.) Fuel pressure is in spec and was measured at the rail
3.) All six plugs are firing
4.) Pulled initial code: 27B5 Inlet Camshaft Control Output Stage. Thought it might be an IN cam sensor malfunction - probed and found no 5[V] signal oscillation while cranking from that sensor. Replaced part, but did not fix the issue.
5.) At this point - I brought it to a private BMW certified repair shop. He performed a lot of diagnostic checks and kept getting the same 3 fault codes: IN and EX as well as crank position sensor errors. He Claims the DME needs to be replaced, but can't tell me why. He replaced IN/ EX cam sensors and Crank sensor during troubleshooting, did not fix the issue. I took the vehicle back without replacing the DME.
6.) Brought car home and performed several other diagnostic checks. DME is in good shape and has not been exposed to any water and has no corrosion. Found that all three sensors use the same 12[V] supply.
7.) I was able to get vehicle to start by only unplugging the IN cam position sensor. Sensor has 12[V] power, 5[V] signal, and ground. The sensor is getting everything it needs and I have continuity to everything from the DME to the sensor. If you plug the sensor back in and try to run the car, it will have a hard time starting and if it does start will kill the engine at roughly 2500-2600[RPM]. This is when the Vanos actuates and increases valve overlap. The engine starts and can redline every time with the IN cam position sensor unplugged. The question is why??
8.) I took an O-scope to the sensor to see if I could pull a 0-5[V] square wave, but had not luck with my setup - making leads for it today to check that.
9.) Wiring harness seems to be in good working order with no corrosion or damage.

Questions/Comments:
A.) Has anyone experienced a similar issue?
B.) I thought that potentially my IN cam trigger wheel might have slipped, but that's not possible because it's installed with threaded fasteners.
C.) I may still need a DME, I figure there could be a short when it tries to send a signal to IN VANOS at 2500[RPM], when it commands cam phasing.
D.) More testing is to be completed this evening on IN cam sensor signal and IN VANOS - Will keep you posted on findings.

[latitude39]

Sorry to hear about your nightmarish problem. It sound like you've done all your homework. Have you had any progress?