Car overheating...or so it thinks...

Hi All

Got some more news on my un-ending story of my 7...

Was driving the 740I the whole weekend with no problems at all until Sunday night. Was driving it last night at about 10:30 with an outside temp of about 5C when I started to hear this weird screeching noise from the engine compartment! This was accompanied by a sudden loss of all hot air in the cabin...was on the highway at the time...so looked for a place to pull over. In the process of doing this, the temp slowly climbed right up to edge of the red zone, so I took a chance and stopped where I could...not wanting to melt the engine. Anyway, turned the engine off, but left the igntion in position 2 so I could see what the screeching was. It turned out to be the heater valves...I put my hand on them and they were vibrating and whining...almost like a dry bearing or something.
So, I turned the key to 0 and waited a second, turned it back to position 2 and all was fine...the temp suddenly shot back to normal, without the engine even being on!
So, with nothing else to do, I tried to get home again...! Needless to say, I had to pull over another 5 times before I got home as eveytime this screetching, gurgling sound was heard, the engine temp suddenly shot up to the red, but was easliy fixed by doing the above. Oh, one more thing, when I revved the car (trying to clear what I though was an airlock), when she was almost at the red zone, she started to make this low down but loud thump and bang noises out the exhaust...almost like a quiet backfire?

Now, from the sounds of things, this sounds like either a failed heater valve or a MASSIVE airlock in the system (although revving the engine does not clear it)...

My question is, could a failed heater valve assembly cause the engine to suddenly start to overheat or are the noises coming from the valves just a symptom of something more sinister...eg: Headgasket

Any comments very welcome

Thanks
Rawdon