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The fact that the original California title had "re-manufactured" listed on it is very concerning. The idea that "re-manufactured" was appropriate due to it's similarities with another production car is very far fetched. BMW didn't build or re-build 1M's using existing 135i's. I also think it's very optimistic thinking that a notarized letter from the original owner will convince your state that the car should have a clear title. If it were that easy, everyone would do it. I think the onus is on the original owner to clarify why the title was listed that way. Ideally this would've occurred prior to the sale, but hopefully he is still willing to help you with this.
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