Here is what happened.. I hope this may help others.

I could not find any pairing button as mentioned in some posts. I was in the X5 just searching through the Bluetooth menu on the phone and was in the menu are where is says "find me". This did not work! I eventually went into the "hands free" section in the phone and the phone found the BMW. I think the "auto pairing" mode is only active during the first couple of minutes after turning the key. At that point, I went to the back of the car and read the PK # on the Bluetooth module. I then entered this into the phone, it was connected. Works very well. I leave the phone setting for "Bluetooth" alway on so when I get in the drivers seat it auto connects. I leave the phone in my pocket! So I think the initial problem was the sequence of events. If anyone has a similar vehicle and can not get the phone paired... send me an email.
Again. 2006 X5, Premium Pkg. Navigation
Phone: Motorola Krzr K1m. sw ver. 2402_01.16.00

Hope this helps someone else!