First, the thing where you say the DSP and phone option on the new MKIII is somewhat normal. The MKIII will show whatever menu options it had the last time it was connected to a car. Then, it will re-scan its current environment some time after turn-on and update the menu.

However, what is a little troubling is that you have the DSP option in your car, so that should not have disappeared. (Do you have phone?)

Anyway, if the nav computer can not find the DSP amp, it will remove it from the menu. That means that the DSP amp is not communicating with the rest of the car. That would explain why your radio does not have any sound. I suspect that your DSP amp has failed also, which means you have multiple, coincidental component failures.

I would inspect your trunk area very carefully for signs of water entry. Plus, give your old nav computer a careful look too, and check the DSP amp. If you had multiple parts fail at about the same time, then I suspect water damage caused it.

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2000 E38 750iL Highline Edition, Upgraded with the lastest 2006 X5 Electronics
MKIV Navigation, 16:9 Display, Bluetooth, TV/Video with Backup Camera, Sirius, and Aux Input