There are a lot of different ways to accomplish this, but here are a few of the design objectives I had in mind when working on this project.  (which, by the way, will probably never be truly finished!)
 
-      PC video directly to the factory nav screen without the use of a video module (since I don’t have one in my vehicle).
-      The installation needed to be as unobtrusive as possible.  No loss of trunk space.
-      The ability to remove the PC easily without disrupting the factory systems. (music, nav, phone, etc.)
-      Straight digital audio connection to the DSP, meaning no analog to digital conversion and no use of the analog tape inputs.
-      Multimedia software control through the BordMonitor buttons.
-      Wireless connectivity to my home network for software/music/movie updates.
-      DC – DC power (no inverter – their poor efficiency is just an unnecessary stressor on the charging system in my book)
-      Inexpensive
 
 
 
 
The PC itself is nothing special and in this type of multimedia setup, there is not much processing power needed.  I went with garden variety desktop components starting with a micro ATX motherboard (MSI 6340) and a Duron 1100 processor – both together for just under $30 on ebay.  My only thought here was that I knew they would fit the space when snugged up against the DSP amp.  I added a wireless PCI card I had laying around, a 512MB stick of RAM, and a new Maxtor 160GB HD.  The case is an old one that I hacked up and bent to fit in the space.
I broke down the project into five basic areas:  Video input, Audio input, iBus control, Software, and Power.
VIDEO
The factory screen accepts RGsB input with NTSC timings (or PAL).  I had already seen others who had used either scan converters for a direct input or their video card’s composite out for input to the Video Module.  After a lot of searching for RGsB, scan converters, etc., I stumbled on a few pages that made mention of Matrox video cards having sync-on-green output up through the G400 model.  Well, after some testing, I haven’t found a G400 that would actually work so I settled on a G200 card that was manufactured for Compaq.  There are some early Dell branded models that should work as well.  The card only has 8MB of memory, but so far I haven’t had any issues with it being too slow.  It plays both DVD and Divx movies just fine.  I used a shareware program called Powerstrip to adjust the card’s output to interlaced NTSC RGsB.  The factory widescreen has a pixel resolution of 400x240 (although the 1st & last 5 horizontal lines are masked).  I used an 800x480i output with the following timing parameters/modeline – 800x480=800,41,56,119,480,25,3,32,15658,175 .  Once the custom resolution was created in Powerstrip, I then assigned hot keys so I could switch between the nav and normal monitor timings in the blind.  Works quite well.  As for wiring, VGA pins used are 1 – Red, 2 – Green, 3 – Blue, pins 6,7 and 8, I connected together and sent through a single ground.  RadioShack provided the ready to solder VGA connector and cover.  A simple relay board controlled by a manual switch allows me to choose what is displayed on the screen at any given time.
AUDIO
Through research on bimmerboard.com and elsewhere, I discovered that the DSP only accepts digital audio at a 44.1khz sample rate.  It seems that most audio cards only output at 48khz / 96khz with no way to change.  I stumbled on the Voltrix Nightingale Pro 6 – in it’s setup, you can select 44.1 output.  It works great, but does occupy two PCI slots for only the one coaxial connection.  I haven’t seen this card anywhere since, but it is based on a C-media model so they may have some options available.  I had thought there wouldn’t be much difference in sound between this setup and the CD player since we are talking digital in both cases, but the PC sounds markedly better than the CD player did. 
The stereo separation is greatly improved, the front soundstage lifted up closer to mid/low windshield, the dynamic range is improved, and even the bass is less muddy.  I did notice that when I removed the CD changer that I had an analog connection to the radio as well as the digital to the DSP (6-pin & coax) – I don’t know if that’s a normal situation or not.  Maybe I have been listening through the analog all this time!  As for wiring, I simply chopped off the SMB connector and soldered on an RCA.  I have removed the CD changer entirely.
IBUS
After removing the CD changer, I needed a way to convince the car it was still there, otherwise the DSP’s digital input won’t function.  I settled on the Eedesignkits iBus interface since it is connected through USB.  In order to get it to work appropriately with any iBus software you must install FTDI’s virtual com port drivers.  For control software, I use iBusComm which is available at sourceforge.  I currently have two issues that I’m still working through. 
1 – typical USB flakiness, I am trying to get shutdown to standby (s3) working so that the PC is ready as soon as the car is turned on.  Occasionally the iBus interface stops responding when waking from standby.  It always works when booted normally.
2 – On start-up, I have to manually trick the radio into thinking a CD changer is installed.  I have the 1-button on the monitor set up to broadcast the radio poll message, then iBusComm responds with the appropriate reply, and the CD option becomes available in the mode menu.  I’m not sure what it will take to make this automatic, but for now the manual solution is fine and reliable. (Problem solved - check the new mods section)
Wiring is simple – USB cable from the board to the PC and then I connected the cd changer’s 3-pin directly to the board (+12, GND, iBus).
SOFTWARE
IBusComm reads the monitor button presses and sends keyboard shortcuts to the multimedia application for control (as defined in iBusComm’s config file).  MP3Car.com is your best friend here.  There are a lot of freely available interface options in their community forum section.  So far I have used Frodoplayer, Road Runner, and am currently testing Media Engine.  These are all designed for touch screen interfaces and include a lot of extras/functionality I don’t need.  RR seems to be the most actively developed and configurable – I’m in the process of designing a skin that will more effectively suit my simple needs.  Media Engine lends itself well to simplicity right out of the box, but seems too limited in other respects.
POWER
Plenty to choose from in this area – for my setup the M2-ATX works just fine, provides ample power, survives crank and has good startup/shutdown options.  The only connections aside from the 20-pin and switch to the motherboard are +12 power, GND, and switched +12.  I took the switched +12 from the x400 plug (usually the violet/white wire, but check your schematic first or test with a meter first).  I also use the spare HD molex from the PSU to power the relay board for the video switch.
HARNESS
The harness is basically a straight through / extension design.  Everything from the nav computer passes straight through to the vehicle harness except the video.  The video goes directly from the nav to the relay board, same with the PC video, and then the relay board outputs the selected source to the vehicle harness.  I had a big, boxy video switch on hand that I cannibalized to save space.  I few cuts with a small tile saw left me with a PCB containing two DPDT relays.  All of the shielded wiring was attached other than the nav video input which I soldered into the existing vias.  The relays – Fujitsu A-5-WK – are available at Mouser.com for $3 ea and are designed for video (for those who are starting from scratch).  They show little / no signal degradation.  I’ve wired them so that when the relays are in an off state, the nav video passes straight through.  The purpose being that when the PC is off, removed, or the video switch is off, everything works normally (BMW logo when you open the door, normal menu, etc.).
For the video switch I used some of the spare wiring in my bluetooth retrofit – I fitted the OEM harness which has 17 wires going to the center console when essentially four are needed.  Some spare ELOs ensured that there was no need to cut any wires; however, this is only a temporary solution.  I intend to replace the front cup holder with a blank panel containing a manual MB on/off switch (just in case!), the video switch, and slot load, notebook DVD drive.
The only part that bugs me is that I jumped the gun on the CD Door – the CPU heatsink and fan extended out just a little too far to fit completely under the door so I cut a small hole with a utility knife.  I have since found a low profile unit that wouldn’t have required it – I may get a new door just to make my install completely invisible.