So I found an old buddy of mine that happens to work at BMW as a mechanic.

His thoughts are the key barrel. He mentioned the key chip sensor might not be working correctly. It might be having a hard time or just slow in reading and verifying the chip from the key.

He's going to hook the car up to the diagnostic computer as we attempt to crank the car on position 3 and see what the computer reads.

I'll keep you guys posted on our findings.