As with many things, everything is much clearer in hindsight. A work colleague stopped me in the parking lot one day and mentioned he smelled an odor coming from my R53, but I didn’t pick up on the clue. Later, as I was trying to find the source of an oil leak, if finally dawned on me that I should examine the valve cover gasket for a leak (or cylinder head cover gasket in MINI speak) as it can cause a burning oil smell but not cause any drips that help show where the leak is coming from.The valve cover gaskets and spark plug tube seals (spark plug tube grommets) are known to leak on MINI’s and should be checked and replaced as the mileage starts to get up there.

The valve cover gasket keeps oil from leaking out of the cylinder head while the car is running – the oil will drain out of the head when the car is off, so leaks here are usually worse when the car is running. What makes this problem so tricky on the MINI is that the engine is tilted about 10 degrees to the back, so a leaking valve cover gasket is likely to allow oil to ooze down the back of the block and onto the exhaust manifold, where the oil will usually vaporize – eliminating evidence of the oil leak. The oil vaporizing off the exhaust is the source of the burnt oil smell or burning oil smell associated with this problem.
The gaskets are not expensive. You can save yourself some labor by replacing the valve cover gasket and the spark plug tube seals at the same time, as the procedure is almost identical. It is not a hard or lengthy job, but does require removing the valve cover. If your car is getting up there in miles or age, it is probably a good time to inspect the bolts and grommets on the valve cover as well. They are replaceable and can be popped out with a finger or a blunt tool once you have the valve cover off.
MINI Cooper OEM valve cover gasket
MINI Cooper Valve Cover Gasket Value Line
http://www.minimania.com/MINI_Cooper...al_Replacement