Ok so I realized something. The center dash speaker is not actually producing distorted sound. The culprit is the grate I've the speaker. When pressing down on the grate while playing music, the distortion is no longer present. Seems that it's not distortion but a really horrible vibration that sounds like a broken speaker. I'm still pretty amazed that BMW would put a speaker in a location where the grate could not be secured more solidly.
I guess my next step will be to visit the service center to see if they will tighten the grate.
I suggest others on here with the same experience with distorted sound attempt pressing on the grate and reporting back their experience.
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