RSE is for "Rear Seat Entertainment" system and is the monitor between the two front seats.
My 2009 X5 came with 6 or 8 DVD changer in the glovebox and I changed my CCC with navigation DVD to the CIC with hard drive. The Harddrive version has an DVD slot and you can play regular DVD's.
The RSE has an DVD player underneath the monitor and it can play regal DVD's and CD's but not burned DVD's