I believe that this is a straight swap in the E46. You are correct that all the other devices store and do the stuff; the screen is just a dumb display, like a computer module. The radio module will automatically detect that it has a single-disk CD player instead of the tape player and change its behavior accordingly.

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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