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I am not familiar with the Dice radio harness, but it sounds like it is a replacement to the OE wiring. This, plus your input about the iPod adapter clarifies things a lot. I am pretty sure you have a bad radio module.
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2000 E38 750iL Highline Edition, Upgraded with the lastest 2006 X5 Electronics
MKIV Navigation, 16:9 Display, Bluetooth, TV/Video with Backup Camera, Sirius, and Aux Input
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