I have the OEM iPodYourBMW kit in my '02 X5. I installed it myself and your description sounds strange. The supplied cable is white and the proper routing is from the back of the head unit in the dash to the glove box. The in-dash CD player does not have to be removed or disabled. I have never made any playlist and it works fine. I usually run it off "CD6" which accessed the entire library and put it in random on the head unit. I'll have to go out and test mine out. I haven't used in a while so I'll refresh my memory and update here if something is different.

It sounds like you might have some other sort of solution.


EDIT: I just ran out and tried mine. The screen displays "BMW" and "OK to disconnect". I do not have any playlists on my iPod much less a "BMW1" list. The MID shows "CD" and "6" for a sort of "Disc 6" idea. There are no indicators for 1-5. It plays fine on "6". As JCL suggested below, there is power so maybe it is some sort of FM modulation system. Try putting it in FM mode and scanning through the channels while your iPod is in play mode. The cable that you are plugging into might just by a 12V power source along with a FM transmitter.

__________________