What you describe is one of the most dreadful things you might be challenged with. I have never had to face that particular challenge myself, yet. I'll assume that you tried to remove the cap screw by using the air impact to apply a sudden burst of reverse torque to break the bolt loose. What I would try next would be to put the wheel back on and try that with the weight of the bike compressing the fork. The rake of the steering head relative to vertical might bind up the damper rod ever so slightly. Draining the fork oil might also help, if that is possible with that particular fork leg. You would need a helper to hold the bike up, or you could sling a ratchet strap or 2 over a garage rafter and rig up the handlebars to hold the bike up. If that failed, I would take a die grinder and grind the head of the bolt off. Again, this is all speculation on my part. At tech days I have attended, the sudden burst of reverse torque has always done the trick.

I just had another thought. If your fork leg has a drain plug/bolt near the bottom that is drilled thru, you might get a longer bolt of the same thread pitch and bottom it against the damper rod inside the fork leg to bind up the internals. The fork leg on my 1985 R80RT has a drain hole as described. I checked the MAX BMW parts fiche, but the illustration is inconclusive.

https://shop.maxbmw.com/fiche/DiagramsMain.aspx?vid=51625&rnd=07242017

Push up on the fork leg. This applies friction between the leg and the rod. Hit the fastener again with your air impact wrench running on 100 psi air. That's going to spin it very fast and hard. Hopefully the added friction between the leg and rod will be greater than the friction between the threads of the rod and bolt. Or, the inertia of the rod will be greater than that of the fastener.

Either way the fastener should spin out.

Thank you James for the tips. If the front wheel is installed the axle blocks access to the damper rod bolts at the bottom of the fork leg. I have drained the fork oil by removing the 6mm bolt you mentioned on your R80RT. Have you know someone to try this binding technique using a longer bolt? I am worried about damage the damper.

Good morning Scot,
the damper rod bolt must have thread locker or corrosion, it turns easy with the internals spinning now. I will try the heat today, however, I am sill concerned that the damper rod will spin. In my frustraition, I also tried using a piece of rolled up bicycle inner tube placed between the damper and fork spring and put the fork cap on. I thought this pressure might capture the top of the damper rod. I know, pretty hillbilly. James mentioned running a longer bolt into the fork oil drain bolt holes to capture the damper rod, any success with this?
Thanks for your help.

I have not had my fork apart on this R80RT. I did Dis-assemble a similar fork on a 1988 R100RS that I used to own. I do not recall anything on the lower end of the damper rod that could be damaged. The business end of the damper resides inside the fork tube and held in place by a threaded ring and a snap ring in the bottom of the tube.

The only time I have seen the bottom bolt spinning was at tech days. The reverse burst of torque (as Wobbly suggests) always worked in those cases. There may be a rubber bumper in the bottom of the fork leg. That bumper may have turned to mush. I would recommend that you give Scott's heat and penetrating oil method a try before using a long bolt.

The long bolt to bind the damper rod should be a last resort. The last thing you want is to damage the threads of the drain hole. If you do use a long bolt, please do not over tighten it. You might try probing inside the hole with tiny screwdriver or a nail or dry wall screw to gauge the depth you need and what kind of material you are likely to encounter.

I got it!
Thank you (all) for all of the advice. It took a combination of many tips, here is what I did.
Front wheel off, with center stand secured.
removed fork caps and springs and put a thick rubber grommet (approx. 33mm) between bottom of fork spring and damper (to hopefully creat more friction) and reinstalled the springs and fork caps.
Compressed each fork leg with a tie down strap.
Inserted a longer 6mm bolt into the oil drain hole and carefully put pressure against the damper rod.
Heated lower fork leg in the area of the damping rod bolt with Map gas.
Air Impact with 8mm hex.

That did the trick. The 12mm aluminum crush washers were trashed, beyond smashed and extremely over torqued.
Thanks again, Mark.

Another satisfied customer !!

😛