Cracked Head on 1990 535i?

[Jesus4Jews]

Hello there friends I have a serious problem , I just bought a 1990 535i from a private seller on craigslist. the guy i bought it from was supposedly a "BMW Mechanic" so i felt like i was in good hands ,So i went to go check out the car,I checked all gauges , and thermostats i test drove it and it drives like a beauty , really smooth ride. So i bought it for $1200. we decided to leave the car at his buddy's shop until i could get the car insured and registered. so once i did. I was on my way to go pick up the car the guy texted me and said "hey you should buy Blue Devil Block Sealant cause i found alittle bit of water in the oil" now i dont know what that means exactly, i asked him and he kept giving me the ok , that this is normal in older cars. Me like a dummy already having bought the car , i went and got it , so i took the car to my mechanic and he ran a couple diagnostic test and he told me that my engine is flooded with water , hearing that i frantically was trying to call the guy i bought the car from and nothing , he did not answer his phone , so now im stuck with a car that my mechanic says has a Cracked Head. Now i've been doing a bit of research and i found at the 535's usually have common problem when it comes to head gaskets being blown, but my mechanic say's other wise he is saying that i have a Cracked Head. so if anyone can give me more insight and information on what i should do it would be greatly appreciated.