Originally Posted by Jafro

Get it checked out anyway. I've never ever known a major engine problem to cause a loss of power steering while the engine is running. Only 2 things can cause that. 1) loss of PS fluid, 2) broken or non-functional belt.

A failing pump is a gradual thing if neither of those have issues, and a warped head will not cause the power steering to fail if the engine is still running.

Check your crank pulley (or harmonic dampener). On a DSM, the rubber damping material breaks down over time and can separate the pulley into 2 parts. One that turns, and one that doesn't. When it doesn't turn, the battery light comes on, the water pump stops pumping, and the power steering stops working. If the outer part of the pulley stops turning, the rubber damper will start smoking, and steam rolls out as you start to overheat. These are ALL the same symptoms as your ride.

Though your bmer is a very different model, my stepfather put over 350,000 miles on 3 different 7-series, and yours is just a baby. Get your compression tested before you dump it. It could be a $100 problem.