IMO, I would try to burn the Image again in Mode 2 as
zeronoo suggested. Mode 1 update usually crashed MK3's. Also keep in mind that you can't always burn CD's at 1x speed if the minimum they support is a 4x. Image burn should recognise that though. Quality of the CD is also "Very" important. What brand of CD are you using? BMW Nav's (especially MK3's) can be very picky and usually don't entertain unbranded CD's. As for the mode, If you Select "Write Image File to Disc" and browse to the image downloaded from here, ImgBurn usually autmatically recognises it as a Mode 2, however just to make sure, check in the log screen at the bottom. It will tell you what mode it's burning it in. If this doesn't work, try Roxio creater, that worked perfectly for my Sat nav as did the ImgBurn