Not sure if you ever got it work with the steering wheels controls. But with mine (2011 E90 not sure if it makes a difference) I deleted all my songs like you. This fixed the switching to the music app. Now I plug in my phone when the song is paused. Then select ipod on the headunit. It starts immediately and I can use the steering wheel controls. You also have to select the random button on the headunit for the steering wheel controls to work for some reason.
2011 E90 328i Space Gray Vishnu OFT//Cyba Scoops//K&N Drop In//Charcoal Delete//M3 Lip Spoiler//Color Matched Reflectors//BMW Performance Black Kidneys//18% Sun-tek CXP 70% Sun-tek CXP Windshield Tint//Lux AE//Full Interior LED swap//WeissLicht Smoked Amber Side Markers//WeissLicht Turn Signals//Passport 9500 Hardwire-Blend Mount//VMR V710 Front: 19x8.5 ET35 Rear: 19x9.5 ET33 Hankook Ventus V12 Front: 235/35/19 Rear: 265/30/19