Seat occupancy sensor pad failed. Apparently there is a recall for the 2006 model but for some strange reason, mine is not on the list despite most all others being listed. Mine was a late build but same exact problem. Repair from BMW is expensive as the seat needs to be taken apart and pad replaced. About $700.

I located a seat sensor pad emulator from a company in Ireland (via eBay) that makes the seat think it is always occupied, therefore, turning warning light off. However, it will not distinguish if a small child is in the front seat and will deploy bag regardless if someone is sitting there or not. Device came with a seat belt override as well as, because the seat thinks it needs seat belt buckled all the time as well. $60, easy install and solved the issue. air bags and seat belt will still operate if an accident. Will disclose to the next owner, however, to NEVER put a small child in the front seat. If the recall ever extends to my VIN, then I will get repaired the BMW way.