If the dealer replaces it with the latest available new gen radio module, then yes, you will get all that you ask about: Sirius capability, aux input capability, adn MP3 capability.

I think that the X5 started getting the new gen radios part way through the 2002 model year, but I am not sure exactly when. So, it is possible that your car could have the old gen radio. If that is the case, it is possible that you may just get a remanufactured old gen radio, which would not have any of the above capabilties. However, it is more likely that you have new gen and you will get the latest new gen replacement.

When you get the car back for service, try to confirm the part number, either from the receipt or by reading it from the new radio module. Then, if you post the PN, folks here can confirm its capabilities for you.

Yes, you will have to install the aux cable at the radio and not in the console area. So, if you do the aux input, you will probably need to run an audio cable up to the dash area. No big deal, considering all that you will gain from it.

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SOLD
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