I dropped the X off at the indy and he showed me a crank damper. Once it's in hand, you can see how it would fail. Its large rubber inner component breaks down and de-laminates from the inner metal core and outer metal pulley. This produces 1) smoke and 2) little chunks of rubber visible below the area, whilst the serpentine belt is not fully driven. Hence the weak power steering if any, and the alternator warning light.

The little chunks are what we saw on my car. What I thought was smoke from the belt was in fact smoke from the damper. He says it's pretty rare, but obviously it does happen. He sees it more often on the E39.

Hope this post helps somebody else with a similar M57 problem some day!

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Reno, France near Deutschland
E70 40d LCI nicely kitted out but no bling stuff
E53 3.0d facelift with manual gearbox
E39 530i facelift with manual gearbox
And a couple lesser vehicles of necessity