The steering wheel buttons are for Bluetooth connectivity, but Bluetooth wasn't standard. If you have the original options list, look for BMW Assist or Bluetooth/Phone in the list. If neither appears, then you don't have it. Do you have a button in the center console area to pair your phone with the car? You'll have one if your car has the bluetooth option installed.
I just noticed that you said you have a microphone. Double-check, as that little plstic grill above the rear view mirror is on all E46's, but not all actually have a microphone in there.
Lastly, the best way to determine if you actually have the Bluetooth system installed is to actually try to pair your phone using the instructions form the kit manual: http://www.e38.org/ULFOwnerManual.pdf