Bayern are not favorites in the Champions League right now, but they are definitely one of the contenders. Everyone is trying to remember Arsenal's amazing results in the Premier League, but the Champions League is a different tournament and Bayern is a team of a completely different level. As far as I can compare these opponents, it is clear to me that Bayern are superior to Arsenal, despite all the difficulties that the team has had to go through this season. Besides, every team has its downturns, and it may be good that Bayern went through this difficult period earlier, as far as their recent results are concerned.
No man. When Champions League comes to quarter finals, there are not many matches left and with player resource at Bayern Munich, they are still one of best teams in the tournament.
They are not at a first, second or third most favorite positions as the possible champion but they have enough power and quality to achieve it. They got a lucky draw to have an opponent for quarter finals is Arsenal. Arsenal are strong in Premier League last and this seasons but they don't have good experience in Champions League and this is Arsenal's biggest disadvantage when playing against Bayern Munich in next two matches.
If Bayern Munich beat Arsenal and play at semi finals, I really disagree to say they won't have good chance to win Champions League. They have problems but they are not too weak compares to teams like Real Madrid or Manchester City.