I've had software glitches. One time it took two overnight downloads to get the update to fix the DCT sluggishness issues, as well as to get BMW Assist functions to work. From what I can gather, it seems my car had firmware issues with the head unit or a component of it. I'm guessing here. But I can say that doing a fresh reinstall of software is kind of a standard procedure for a glitchy system that is throwing mysterious errors. As noted above, patches can fail unexpectedly.
Another interpretation of the dealer's question: Do you have an custom tuning here? ... because if you don't stop me, I'm going to overwrite everything. A master mechanic who's been around a while may know enough from sound/feel of the car (as OP apparently went by) to sense something is different and ask before deleting a customer's mod. Could have been simply a courtesy call to ask, not anything like an accusation.