Maybe the speed sensor cable was not wired properly.

The correct wiring for the E46 is:

Nav system X1312 violet connector pin 10 - this is the TAA speedo pulse signal, to tell the nav system how fast you are going.
TAA = Blue/Red wire in retro-fit harness
Goes to IKE (instrument cluster) plug X11175 and connects to black/white wire on pin 8 of X11175
X11175 = black 26-pin plug on back of instrument cluster

If you have the proper retro-fit wiring loom, then the blue/red wire comes out of the loom next to the big square 'old radio' connector, located behind the monitor in the dash.

Make sure you also have the reverse signal connected (RS, Blue/yellow wire, pin 1 of X1312 violet nav connector)
This wire also comes out of the retrofit loom by the old radio connector.
It is supposed to plug into the joint-connector X428, located above the fuse box.
The joint connector is for the reverse lights. It has 12V on it when the reverse lights are on.