I have the same issue. iOS 9 worked fine. Since i upgraded to iOS 10 my brand new BMW now has problems. Phone connection works fine. But as soon as I connect music the whole BMW system crashes - no radio, no navigation! After restarting the BMW the phone is still connected but nothing is working.
After disconnecting and connecting the iPhone, same problem.
Like with the iOS 8 update it is another bluetooth buck from Apple - again. Doing a failure once is ok but the second time ....
At least I can use the bluetooth phone. At for the music I have to use the adapter because I have a new iPhone 7 now and thanks to the missing headphone port I can not use my AUX!
Tim Cook said in a interview "We removed it because the future is wireless!" - As long as Apple is not copy the bluetooth bug in a major software release ;-)