emilc i have almost the same issue as you- I took a dvd and put all my mp3s on it thinking the BMW dvd player for rear seat entertainment would read and playback my mp3s on dvd since it would playback mp3s on cdrs.
it wouldnt recognize the mp3s on dvd and I think its due to the dvd structure. DVD audio is mpeg2 or m2p audio. sSo the only way i got my dvd player to recognize my mp3 collection was to reathor my dvd to make it dvd compliant. So thats probably why the dvd nav wont read your mp3s .. a compliant dvd has a vob,bup and ifo formatted files ALSO folders are AUDIO_TS and VIDEO_TS and JACKET_TS. IF the bmw nav us not setup to play a normal dvd then what your trying to do with dvd is useless. you would have to rip the bmw dvd to your computer and figure out the file structure.

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E53 06 3.0i

wishlist
Comfort Seats
speckdock 2.5

Mods
Air suspension - wip
skid plate replica - in box
OEM sunroof deflector
OEM bluetooth streaming
navi,dsp,tv retrofit - wip
Low prof roof racks
2 directtv satelite tuners
Grom audio usb2
quarter and back window sunshades
2 10"subs- boxes opposite sides/Alp MRP-M850
rear heated seats retrofit
rear footwell lights retrofit
remote window roll up