Heres the latest...

I took it to Stevens Creek BMW and they say it is the compressor that is bad. So now i have one independent shop telling me its a leaky airbag and the dealer telling me its the compressor. Note that while the car sat for a week while i sorted out the warranty (which still is not sorted out!) the car did not lower itself at all, which from posts here would seem to indicate that the bag is not leaking.

So, i will most likely get the compressor fixed and then drive it for a while only to find out that the bag is leaking or something else is actually wrong - if any of the posts on here are anything to go by.

I will keep updating as things progress, if for no other reason than someone else can learn from my symptoms and ultimate resolution.