Regardless, the "fading" or discoloration in the wood, it is not covered by warranty. You need to get clarification on your warranty. I think you have the REMAINDER of the OEM warranty plus whatever your CPO warranty is. Manufacture's warranties begin when the car is first put into service (even as a demo), not when sold to the first purchaser. So, if the X was put into service as a demo in July 2006 but sold to you this year, your original warranty is over. It's suspicious why a dealer would keep a demo in service for that long before selling it.....

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'03 Carbon Black M5
'04 Silver X5 4.4
'04 MB SL500