The early production units of the 90's BMW M42 four-cylinder engines were built with a defective gasket sealing a coolant passage between the block and the head in the front timing case.
After about 40-60k miles, depending on how well the coolant was maintained, the gasket's failure would manifest itself via an external leak.
An improved gasket was the prescribed fix, but BMW noted in its service bulletin that if surface pitting had occurred, to use JB Weld to repair the surfaces.
Permatex 85420 is their equivalent to Hylomar Blue, but if you can get your hands on the real thing, that's the better option.
Hylomar can be used as a gasket dressing, or replacement, but given the fact that there is a groove for the o-ring in the other fitting, I'd keep the o-ring. I'm not a fan of relying on goop to bridge large gaps.