None of this was worth disagreeing over but some things to be straightened out. The general information about the engine may be the most ambiguous information about an engine that's been. Starting with this, the BMW M12 engine never raced in F1.
The BMW M12 engine began being used in 1962 as an F2 engine. This engine never made anywhere near the hp numbers stated here. It never raced in F1 until 82. Starting in 82 the F1 engine specifically used old used blocks. The blocks were re-machined, usually with sleeves and with the turbos the completed engine was capable of about 1,100 hp. It qualified at about 850 and raced at about 650 so it could last the race. This engine was actually rebadged as the BMW M12/13. USF&G bought the engine program 86 and more changes to the engine came. This engine was rebadged again as the BMW M12/13/1 and then re-badged as the Megatron. BMW may not have made a dry deck aluminum block but others definitely did with some stated to exceed 2,000 hp. The engine was dated and gone by 89 when F1 banned turbos. The Ford Cosworth DFV's was a much more powerful naturally aspirated engine.
The original M12's were still in use for F2 and Touring Racing until the early 90's. The original M12's were about a 350 hp engine and was a derivative of the M10 which was based on the design of a straight 4 motorcycle engine.
An interesting trivia fact about the M12/13 engines and about using the used blocks. It's where the whizzing on a hot block for strength myth came from.
The engine's been gone for 30 years and was never a common engine in the US so information on the engine isn't easy to track down although there is limited information available, mostly in books by former machinist's and mechanic's from the racing teams. Some are available for viewing at The Henry Ford's archive but I don't believe any are in English.
Did the original M12 engines have the groove? I don't know for sure. But I've never seen or come across it before the re-machined M12/13 engines which again began in 82 when the engine entered F1 racing. The reason for it, as I've come across was heat differential between the sleeve and block when the engine was operating at temperature. The sleeves didn't use any other method to locate and hold the sleeve such as flat on the flange.
EDIT: More trivia, in 87 F1 limited turbo boost to 4 bars and in 88 it was limited to 2.5 bars. That equates to 58 and 36 PSI of boost.