German all wheel drive with enough rear seat room for 6 foot and growing teen

Heated steering wheels have only become somewhat common in recent years, so you might not be able to find a larger European car with on in your price range.

If the A6 back seat is too small, it sounds like it's time to look at the A8, 7-Series, and S-Class.

Scratch that, just had a thought out of left field: BMW 5-Series GT. They've been a sales flop, but more-or-less combine the handling of a 5-Series with the rear seat room of a 7-Series and the practicality of an SUV. The first model year with the six-cylinder, 2011, is within your price range.

Returning to sedans, you might want to at least test drive an Infiniti M. They have tighter steering and handling than most Japanese cars, plus a roomier back seat than the midsize Germans. The 2006-2010 feels roomier up front than the current generation.

Reliability and German cars don't really go hand in hand. If you are dead set on German, I would recommend a 2012 Mercedes R350. The 2012 R350 came with the new 302 hp V6 engine which is just as powerful as the older R500 V8 model.
I would probably take the cash, find a decked out leftover 2014 Ford Flex and call it good. The Flex is based on a Volvo platform.

I like the Flex, but if he finds all German cars vague then this Ford's dynamics aren't going to pass. Very soft with numb steering. Great ride, though.

The Toyota Avalon is hardly representative of all Japanese cars--it's essentially their Buick.

The Infiniti M I suggested earlier handles much differently.

For $35k you can find a good deal on a 2011 - 2013 x5. I am 6ft 2in and fit well in both the front and back seat. You should be able to find one with low miles as well. we got a 2011 cpo diesel with 20k miles for $40k a year and a half ago. Awesome car so far. Much better than the 2003 x5 we had. decent gas mileage as well - upper 20s

in 2011 the x5s got new transmissions and other minor tweaks, that's why I said 2011 - 13. 2014 is a new model year which I would probably avoid.

A6 is an awesome car. I for some reason was more comfortable in the previous body style that ended in 2013, not the 2014 and newer. You can always find great deals on used a8s and 7 series sedans too. They depreciate like crazy. More so than the a6 or 5 series. X5 or A8 would be my choice.

Hope this helps!

It does sound like you need one of the truly large sedans if you get a sedan at all. It also explains why Infiniti is offering a long wheelbase version of the car for 2015. Someone my height has no need for such a car, but some people are well over 5-9. The M is offered in both sport and non-sport forms, and you could have driven the latter. But if there's not enough room, that won't matter.

The diesel is the way to go for decent fuel economy in the X5. But, as you note, there can be some additional reliability issues with the BMW diesels from a few years ago.