Well...If you just push it toward the left of D and don't touch the lever afterward, then it's in auto-sports mode...and that SHOULD be OK for the tranny since it's still in automatic mode. You'll just end up using a bit more gas because it tends to shift a bit later in the rev. band for sports mode. The display on the dash is a bit confusing since auto-sports mode and manual mode - 5th gear, are both indicated by D 5! I supposed the 5 looked close enough to an S that BMW didn't bother to make the distinction? So, if being able to read the MP3 player's display is more important than saving a bit of gas, then by all means, use the sports mode!

BTW, I don't think you can lug the engine even if you wanted to in manual mode (semi-manual). Try putting the tranny (in manual mode) to 5th gear doing 30-35mph and stomp on the gas. I would wager that the torque converter just end up working a bit harder, that's all.