I don't know what a retired mechanic makes per hour for side work. The dealers are getting $100-$125/hr. Planning on 1.5 hours seems pretty generous. You will have to buy the gear and take it to him - it is not a BMW part. The part is down to $11 now.
One source:
http://www.amazon.com/Transfer-Motor.../dp/B00H2TD5IQ
If you lived in Maryland, I would change it out for you just to find out if that is what is wrong!!