Coding tells the module what system is installed, giving it the proper operating parameters. Basically tells it which vehicle it is installed in and what it is working with options wise. What is meant by it will work when plugged in is all the output channels should work to confirm the diagnosis and that you are changing the correct part. If you plug it in and nothing has changed don't get it coded as it isn't the problem.

Ok I get it now, I found the radio for $585 brand new at this website,
Best Sellers BMW Latest Version BM53/BM54 Radio

Is this the right product that I need and is there a lower price for brand new?

Should be, you can always cross-reference with realoem.com for conformation. As for pricing, all you really can do is search around.

I just installed the conforti shark injector in my car, if i take the x5 to the dealer to get the radio coded, Will they notice the software? Do i have to restore it every time i take it to the dealer?

E53 is not an integration level vehicle, so coding the radio does just that... codes the radio. The DME software will be untouched. If you want to be extra sure you can put some kind of notice sticker on the OBD port saying not to change DME software. (dinan software comes with a sticker like that)

**UPDATE**
I recieved my new bm53 radio and installed it and it solved the problem. All 10 speakers now work and sound great. Now I just have to get it coded soon. Can any harm be done to my system if the radio isnt coded right away? Its been 2 days so far without any coding done yet.

You are all done. Coding is not necessary for a BM53 radio replacement.

Great! Finally after a year, my music sounds awesome like it should

Today I noticed something different. When I toggle through my radio presets on the steering wheel controls or on the head unit there is a delay for the audio to output. Sometimes the delay is not long maybe like 2-3 seconds, but sometimes it can take up to 10 seconds!! My old radio would not do this, if i went from preset 1 to preset 2 it would switch right away with less than a second of delay. I think it has something to do with poor radio reception in certain areas. Anyone experience this problem? Please chime in