Complex sentence: The R1100S uses the BMW's "oilhead" (i.e. air-cooled cylinders but oil-cooled heads) engine of the BMW R1100RS, but modified for greater power and with a six-speed gearbox.
Split into simpler sentences: The R1100S uses BMW's "oilhead" engine that has air-cooled cylinders but oil-cooled heads. The engine was derived from the BMW R1100RS, suitably modified for greater power and with a six-speed gearbox.