Update:

I took the car to Woods BMW in Hook UK for retrofit coding of my DIY NAV install and to recode the second-hand Nav Computer.

The dealer again confirmed that warranty is not affected by a DIY retrofit irrespective of whether it's coded or not.

Coding was partially successful, the Radio, Nav and various other modules were updated with new software. However the update process "hung" trying to recode the Instrument Cluster and the whole retrofit code could not be completed within the two hours we'd agreed for this work. I decided not to proceed due to potential cost. Backing out left the instrument cluster in the original state - useable.

The dealer were ok about this - not charging for the "failed" upgrade and offering to complete work for a fixed price of 2 hours labour. I opted to test the car and decide later if this coding was worth while. 1 week on I probably wont bother as everything works fine.

Bare in mind that dealers charge a fixed price of 5 to 6 hours to do a full Nav retrofit into X3 (plus parts) INCLUDING coding. The whole point of doing this myself was to save the £600.

Subsequent testing reveals no major changes other than:

1. Telematics settings on Mk4 Nav Computer now correctly shows X3 as vehicle type and my VIN
2. Computer speed limit warning now flashes on speedometer as well as sounding alarm
3. All other functions are working as before (Nav, ULF, BT Integration, etc etc) - not noticed any changes or improvements
4. Dealer was unable to activate Voice Recognition in ULF

Conclusion: Coding is probably not necessary but to keep dealer happy and 3-year warranty intact it's probably worth £100 to get this done or at least attempted.

NOTE my X3 was built Sep 2005 and all retrofit parts were Sep 2005 or later. I think the software across these new modules was therefore fairly comptatible to start with. Others retrofitting a mix of old / new parts may have different results.