Slight resurrection for clarity sake. To save others trawling through the thread, here's a summary based on my research.
the E46 is capable of adding an AUX port, depending on the model of the Business CD head unit installed. In general terms 2004 onwards should be compatible. The only way to know for sure though is to check the part number of the actual radio. It's relatively easy to remove.
The below list explains the compatibility:
1998 to 2001 E46 3 Series vehicles
Blaupunkt, Part Number 6512-6 909 883 iPod Data Capable
Blaupunkt, Part Number 6512-6 909 882 iPod Data Capable
Blaupunkt, Part Number 6512-6 902 661 iPod Data Capable
NOTE: iPod Data Capable is ONLY if the car is Prewired in the trunk for the CD Changer - You can also add Aux Input ONLY thru an iPod Data Kit like the USA Spec PA12 or the DICE iPod kits
2001 to 2007 E46 3 Series vehicles including the E46 M3
Alpine, Model CD53, Part Number 65. 12-6 916 241 (July 2001) iPod Data Capable
Alpine, Model CD53, Part Number 65. 12-6 915 711 (Sep 2001) Ipod Data Capable
Alpine, Model CD53, Part Number 65. 12-6 919 072 (Dec 2001-Jun 2002)iPod Data, Sirius Capable
Alpine, Model CD53, Part Number 65. 12-6 921 963 (July 2002-Jan 2003)iPod Data, Sirius Capable
Alpine, Model CD53, Part Number 65. 12-6 927 902 (Feb 2003-Aug 2003)iPod Data, Aux and Sirius Capable
Alpine, Model CD53, Part Number 65. 10-6 927 903 (RMFD thru Dec 2006) iPod Data, Aux and Sirius Capable
Alpine, Model CD53, Part Number 65. 12-6 941 505 (Jan 2004 - Sept 2004) iPod Data, Aux and Sirius Capable
Alpine, Model CD53, Part Number 65. 12-6 941 506 (RMFD thru Dec 2007) iPod Data, Aux and Sirius Capable
Alpine, Model CD53, Part Number 65. 12-6 943 429 (Oct 2004 -Sept 2005) iPod Data, Aux, Sirius and MP3 Capable
Alpine, Model CD53, Part Number 65. 12-6 943 430 (RMFD thru 2008) iPod Data, Aux, Sirius and MP3 Capable
Alpine, Model CD53, Part Number 65. 12-6 961 215 (Dec 2005-May 2006) iPod Data, Aux, Sirius and MP3 Capable
NOTE: RMFD = Re-manufactured/Refurbished.
If you find any BMW Business CD53 Radio Unit with a production year date sticker on it that is later than these production dates corresponding to each part number unit (IE. a year date that is 05, 06, 07, 08) it is most certain that those units are re-manufactured/refurbished (RFMD) under warranty and re-labeled to reflect the date of re-manufacture. This is especially true for the factory recalled MP3-capable BMW Part Number 65. 12-6 943 429 unit which is always re-labeled to become BMW Part Number 65. 12-6 943 430 after refurbishment.
https://www.bimmerforums.com/forum/...ess-CD53-Alpine-Radios-that-play-MP3-Data-CDs!
If you have a compatible CD you can either DIY your own cable based on this thread or buy an OEM cable (expensive) or look on ebay for a non-genuine cable. One quirk of the CD setup is that in the majority of cases, the cable on it's own will work to display the AUX input mode ONLY when you have an active source connected to the unit and only if you are NOT using the cigarette lighter to charge anything. As soon as you connect a charger to the cig lighter, it creates a ground loop and AUX is disabled. The workaround is to incorporate a 330k ohm 1W resistor joining the left and right stereo cables and then add a 220um capacitor separately on each of the stereo wires.
Doing this will set the AUX circuit up so that the AUX option is always visible in the cd units mode's (even if nothing is connected) and you are able to charge at the same time. A great simple guide is here:
https://sftf.wordpress.com/2010/02/21/e46diyaux/
Finally, a word of warning. Many of the non-genuine cables purchased off ebay lack the capacitors and resistors. These will work, but only when AUX input is connected and a charger is not. This is what I ended up with. The good news is that it's easy enough to open the ebay cable and solder in a resistor and capacitor to get the best of both worlds. The advantage of this is the molex style pins at the stereo end are already configured for you, there's a female AUX port at the other end all wired up. For me I peeled the heatshrink off the aux plug end to check the wiring. Mine had four wires: red and white stereo wires (left and right), a black ground wire and a green wire that was not connected to anything. Once you've confirmed this, heatshrink the cable back up, go about halfway down the cable and carefully slice open the cable wrap. Slice enough of the wire wrap away to enable you to pull out 4 or 5 cm's of the inner wires. Pull the red and white (or whichever colour is the stereo on yours) wires free and snip them. You then solder the resistor across these two wires (at the CD unit end of the split, not the aux end) I then soldered on to the red and white wires, after the resistor, an extra cm of 26 gauge wire i had to give me a bit of room to move. take your capacitors then and solder to either side of the red wire, do the same with the white. The result should be the molex connector at one end, halfway along the cable there's a resistor bridging the red and white stereo wires, then each stereo wire continues through a capacitor and back into the wire wrap to the aux at the other end. Generously heatshrink the connections, wrap with electrical tape and you end up with a fully functional aux cable for very cheap (ebay non-genuine cable was $6, resistors and capacitors were less than a dollar each).
I ended up drilling a small (6.5mm) hole in the trim piece between the stereo and the steering wheel (which is one of the pieces you are removing anyways to extract the stereo) and screwed the AUX port into that. The cable easily feeds through gaps behind the dash to come out in just the right spot. I then have an AUX port on the drivers side of the dash, just next to the steering wheel. I am able to connect a bluetooth wireless unit ( I use the Anker Soundsync) to the AUX and power off the cig lighter. I can mount my phone on the dashboard, in easy reach and view for screen control or GPS, and the Anker unit allows me to control functions (incl Siri) from the small puck glued to the dash right next to the AUX. easy as pie... eventually!_nr_