I have been researching the above and what i got is mixed info. :'(
The question is does aftermarket coil over like Bilstein PSS9 or H&R work well with car equipped with ARS/Dynamic Drive?

Call H&R tech support, no straight answer, worse never heard of ARS. Bilstein the same, no e60 PSS9 available in US market. German factory no definite response.
Info from those associated with BMW recommend not to mess around with after market coilovers if you have ARS, of course if you asked any BMW rep, the answer will always be no for any after market other than those they endorsed suchs ACS etc.. BMW claims that the car with ARS set up has specific geometry on height and wheel alignment wrt to the suspension set up to gain the most in terms of handling dynamics. After market suspension does not match 100% to the DD/ARS intended set up. True?

Now... I am on dilemma, I have ARS but normal suspension, with 19" wheel on, the suspension sucks big time now due to stiffer tyre making the car bounced more on wavy tarmac during spirited driving. I am thinking of just retrofitting the OEM sprot suspension to get the safest set up but is this a compromise?

Any expert here with opinion to offer?

 

I'm not expert but here's my 0.02 for what it's worth.

BMW Active Roll Stabilization (or Dynamic Drive) uses a hydraulic coupling in the middle of the stabilizer bars. This unit decouples when the car is going straight, allowing the suspension to be more compliant and the ride to be softer. When you make a turn, the stabilizer bars reconnect and keep body lean in check.

While BMW may call the ARS/DD setup an "active suspension control system" the system is really keyed on the anti-roll bars on the front/rear axles of the car. Using electronic sensors and control valves, the anti-roll bars will stiffen when cornering and softens when going straight.

In theory, your suspension setup should not affect how or whether the ARS/DD will continue to work with an aftermarket system.

The key question, which no one apparently really knows the answer to, is whether an aftermarket suspension setup (from GC, Bilstein or Praxis, etc.) will result in handling characteristics that you (the owner) will be happy with.

Depending on the suspension system you get, if it set too stiff or the compression ratios are too high or if the springs are linear as opposed to progressive, the ARS may stiffen the anti-roll bars too much so that when you corner the car will almost feel out of control like it's fish-tailing. This doesn't mean that the ARS is now defective or disabled because of the aftermarket suspension system, it just means the two systems are not yet in sync.

If you go aftermarket suspension, just have to make sure that its settings are tuned to the settings for the anti-roll bars for the ARS.

Bottom line - ARS is an anti-roll bar system and works, mechanically, independent of the suspension.

Sorry for the long (and perhaps incorrect) answer -- but that's just my Monday rant ...