Hi Andrew, not sure when you posted your question. I had the same problem with my unit on my E46 330. Dashboard displayed No CD. Bmw say you cant fix it.
I used a repair place in East London, dont have the details at hand, but if you are interested drop me a line at johnquatermaine@hotmail.com and I'll forward the details. The repair, irrespective of the fault was £80 and the unit works fine now.
John, June 2008