Firstly sorry to post another explanation on rost12's post explaining the same thing without those lovely photographs but I just thought I would point out how easy it was to install on a 1999 M5 which already had the BMW factory fit Motorola.
Just to let you know that I put in a retro fit BT system courtsey of a wiring loom from bimmernav.com and the ULF module # 84 106 969 268 'courtesy' of BMW.
A ULF module number was given to me by bimmernav.com as the most recent but then BMW gave me the above number as being for my chasis number even though it was them that said they/I could not put in a BT system.
Wiring loom $350 + $25 p&p (bimmernav.com)
BMW ULF module £300 (probably USD 300 ??? despite 1.8 conversion £/$)
BMW ULF bracket £12 ($12??)
Phone holder £20 (new but private purchase)
Nokia 6310i re programming £10 (Nokia supplier)
Probably a hour or two work depending on how much hoovering and cleaning you do as you go along. Remove centre armrest via the crappy cupholder and connect up part of the wiring from bimmernav.com. Open boot and disconnect the navigation system to insert the new ULF and ULF bracket. Add in the new wiring loom from bimmernav and remove the old gubbin's from the old phone. Obviously reconnect the nav system (checking on the connections to the unit - my silly mistake, hence this post).
Finally remove the rear seat to place the 'antenna' for the BT system which communicates with the ULF system in the boot (it is recommended that it is put under the rear seat for maximum reception). A wire connected to this needs to be fed through to the boot setup which can be a little fiddly. Pairing of the phone as per the handbook can then begin. You may also have to get your phone reprogrammed with the latest operating system for the whole thing to work properly my Nokia is two or three years old but is still an excellent phone without all that camera/MP3 sh*t (I only want to communicate).
All the usual features of the modern day BMW BT system work such as the steering wheel button and dashbord display. I should add that my system replaces the original BMW Motorola 8700 set up. Having spoken to Baz a 1999 year 528 owner (Thankyou again for your assistance), who had the older BMW phone connected by a line to the car you may experience a problem with not having a coaxial cable running from the centre armrest to the boot and so have to purchase some specially thin coax and then feed it under the carpet to the boot. Nauseating.
For fellow UK residents I should point out that BMW have a list of BT approved phones on www.bmw.co.uk/bluetooth
and I suspect it might also be useful for Yankees too although they should probably check that the phone is Tri-band for US usage.
I should also add that having a phone specific tray will ensure that the signal is boosted (it falls out when sat in the car loose) and the power is replaced through constant charging as BT saps the battery as gurus will know.
All in all SUPERB. I now have two smiles when I get in my car.
Ps Questions on a postcard.