I tried the y cable from my prev 08 328 vert to rule it out, unfortunately as Uppie said it is not the Y cable. I tried the apple cable and this one only charges the device, I dont think I have any tech related items (no BMW assist button ...etc) for this to work
I also tried playing mp3s from a usb stick and interestingly works without a problem. This makes me think perhaps it is a power issue, since iphone needs more juice than the usb stick. I was monitoring the device and it always showed that it was charging. Also since the memory stick is fine I dont think this is a harness issue at least in the comm lines. Perhaps weak 5V or GND. (x3 was parked btw)
I also found the part no 61122167663 from bmw that can take extra juice from the 12 V in the arm rest. Planning to bring the x3 to the dealer tomorrow and if they have this part I will ask them to try it and see if it resolves the issue.
Uppie what is the lead time to get a new head radio unit?