I have been driving a loaner '09 535 Xi with factory ipod/usb in the center armrest. It was working well and then starting acting funny. This was before the OS4 update. The update seems to have had no effect. I have a 2nd Gen iPod Touch. I just had the OEM iPod adaptor installed in my '07 530 XI (glovebox). I will report back on that once I start using it.
'07 530 Xi ,Auto, Gray, Black Leather, Premium, Cold Weather, Nav,Xenons,iPod,Sirius
'04 X3 2.5i gone
'07 X3 3.0si gone