Well, I went down to see the car again today...and ended up buying it!
I popped over to my brothers work (Subaru & used car dealership) first thing this morning who are selling a Silver 2006 X5 SE 3.0D with 50k for £18,000 (with no intention of buying it), apart from the wheels, SE interior and SE alloys, it looked exactly the same as the CAT D one. I had a nose around and came to the conclusion that there was not an £11,000 difference between this 2006 SE and the 2004 Sport I had driven the day before.
All last night I scoured the net for a similar age/spec/mileage car to the CAT D one, and each example I saw was at least £9500 for a base spec model with most of them way over £10k. And as mentioned above, some cars that were £7000 a few weeks ago are now up at considerably more than that now, presumably due to the harsh weather the last couple of weeks
I called my insurance co and they verified that they are happy to insure the car, the premium isn't affected either, but confirmed that in the event of a total loss; they will only pay out the value of a 'CAT D' X5 at the time, which is fair enough. I was told that if this did happen, I would need to find some CAT D comparables to prove the market value of the car at that time.
This time I saw the car, I took a mate with me who specializes in body repair as well as my brother who is a mechanic at Subaru. I had pre-warned them both that the damage was pretty bad and shown them the pics, but as soon as they saw the car, they were both surprisingly optimistic about it, and even in my own head I had pictured it a lot worse than it actually is.The photos I took yesterday were all 'extreme close ups' of the damage and actually looked a lot worse in those pics than it does in the flesh!
My brother bought along his diagnostic equipment and plugged in into the car to have a nose at what's being going on. I was happy to see no fault codes and that the airbags had never been deployed. I was also happy to discover it has full BMW service history up to 110k.
After some tough haggling we reached a price that we were both happy with (after me actually walking out of the dealership saying "i'll leave it then" and being called back for some further negotiation

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I won't reveal the price I paid on here since I will be selling it again one day, but compared to the Pre-facelift Blue 2002 110K base spec SE model I posted the link to on here a few weeks ago that was the same price, i'm pleased with the deal and feel I've got a much better car for the same money, even if it is a CAT D
The two front tyres are also ok, but I do need a couple of rears, so that will be my job tomorrow.
Anyway, I'm looking forward to the project of fixing her up and will certainly post some pics of the progress
Thanks for all your help and advice chaps, i'm, now part of the fold
