Alright let's get you up to speed!

BMW outsources it's auto transmissions to GM. The electricals of the transmission most often fail. The particular model BMW uses has only been used in one GM product, the Cadillac STS - which interestingly enough has several service bulletins outlining procedures to fix the transmissions. BMW has done and by the looks of it will do nothing about it. Your transmission will last approx 100,000 - 120,000 miles in most cases depending on your driving style and behavior. After that you will require either a new transmission or a rebuilt one. If you like manual's, go that route, those do not break. However I can totally understand you not wanting to go that route in an SAV (I didn't want my X3 to be a manual either!).

BMW 6 cylinder engines are very reliable. No problems here. I really abused my 04' for 40,000 miles with no problems. If you are a first time BMW owner on a limited budget stay away from the V8's!

BMW's are pretty expensive to repair. Mechanical faults aren't that great but electrical ones are. However with an X3 which is based on the previous generation 3 series platform you'll have a great deal less kinks than other newer BMW platforms.

Problems I had with my 04 X3 were (also note I had second month of production):
- Squeaky doorsills.
- Rough steering.

With that being said 2004 was the first year and you'll get a much better car if you get at least an 05'. There is a large batch of 2004 cars that suffered from squeaky door seals that had to be re-oiled every once in a while. Nothing wrong with them or anything that labor or cost intensive just a huge annoyance in a $40,000 car! My 04' also suffered from some squeaky plastics around the cabin. The 05' also come with a reduced option set and improved interior materials (all interiors no longer got grey carpeting, the top of the dash was black instead of grey, chrome interior door handles).

The 04' should also still be under it's original warranty of 50,000 miles or 4 years which basically = you having to pay for nothing except for gas & tires. Also you might want to consider buying the extended warranty that pushes this warranty to 100,000 miles - however note that you can only buy the extended warranty if you are still covered under the original 4 years or 50,000 miles.

I loved my X3 and certainly did not treat it like a SUV. Come to think of it I was much harder on it than I am on my ///M roadster. The things you call pull off in that vehicle thanks to the xDrive clutch is nothing short of amazing.

If you can, please point us to a specific car you are interested in. There are some 04's that in my opinion everyone should definitively stay away from!

Edit: You should check out the article I wrote on wikipedia (http://en.wikipedia.org/wiki/BMW_X3). You can see the changes 2005 & 2006 brought...