www.cobratransmission.com - Sells every part for the ATC500 and remanufactured cases as well.
I still think the shop you have it at has no clue what the problem is and are only recommending replacement because they just want to get it off their lift, and don't want to take time to take the case out and diagnose properly.
Cobra sells a Remanufactured ATC500 for $2,223. If you take that 4k number from BMW you're joking yourself.
Find a driveline/transfer case/BMW specialist in the area if you can, unless you really have faith in this shop. I'm guessing your options are limited in your area.