A bit of an update on this.
I have had the new unit in the car since the weekend, and I'm not as happy with it out on the road as I was with it in the driveway. So far, I wish I hadn't bothered. The sound is better, but it's hard work getting it that way, and CONSTANT adjustments are needed. Dennis has suggested that to get the best out of the unit, I should at least upgrade the speakers, and possibly add an amp or two. I might do the speakers, but I don't really want to go any further. I just want decent sound all the time - without having to adjust bass boost, loudness, settings on the 13 band equaliser or WHATEVER - every time a song changes. As things stand :
The iPod / BT Audio sounds best using the EQ settings pictured below - not perfect, but as good as I can get it. The CD seems best with a flatter setup, and the radio is best with the two highest and lowest settings raised and the rest left flat - but I have to stress that music on the radio is sounding crap most of the time.
I'm now wondering if this aftermarket setup was worth the hassle. It's cost me a bit of money, doesn't look as good as the OEM setup, I'm having to adjust it constantly to find acceptable sound - it's doing my head in to be honest. I feel that if I went down the road of adding speakers, I would then need an amp etc - and will I really ever be happy with the sound? So far, my advice to anyone thinking about going down the aftermarket road would be to either go all out with a proper install, or don't do anything at all.
I expected to fit this Kenwood unit and immediately have a bit of an improvement in the sound. I didn't expect perfection, as obviously the stock speakers have their limitations, but the amount of farting around that I am now having to do is ruining my enjoyment of not just the sounds, but the car itself. Unless the sound settings are seriously tweaked, the sound is either muffled or tinny - and that can change from one song to the next. That wasn't the case with the OEM stereo, plus the OEM one had :
Treble and Bass adjustment
Individual buttons for the radio channels
Integrated looks
Better colour match to the dash
I'm going to stop going on now, as I'm putting myself in a bad mood. The stereo will remain switched off for now. Dennis, I'm grateful for all your advice mate, I really am.
Mark 
2003 BMW 530i SE Auto on Style 32s, M-Tech suspension, lip spoiler
1990 BMW 535i Sport on Style 37s, Bilsteins and full late Sport interior
2007 Ford Focus CC - 3 2.0 Petrol, Tan leather interior, loads more toys than my E39
2003 BMW 318i SE - Hers - Angeleyes, lip spoiler, 17" Type 137's, 40mm drop, Titan Line trim, BMW Business CD - GONE
1995 BMW 525i SE Auto - M5 Interior, 17" Style 5s, 30mm drop, clear lenses and Sport bumper - GONE
1996 BMW 525i SE Auto - Full spec interior, Metrics, totally standard - but crap - GONE
1994 BMW 525i SE - the Calypso Alpinalike! Alpina front bumper, 17" Alpina wheels, 30mm drop - GONE
1991 BMW 525i Sport - M5 Replica, 50mm Drop, 17" Throwing stars, full M5 kit and interior - GONE