The message comes from one of two things, the oil level is low, or the sensor that detects the oil level is failing. On the E46, this is a common issue that is nearly always caused by the oil level sensor. I don't know that the E53 has the same issue or not, but you are describing the affects of a failing/failed sensor. It's pretty easy to replace on the M54 (3.0L engine). Well, it was easy on the E46, the E53 has the pesky deep oil pan that the E46 does not have. Having said that, the sensor is in the bottom of the pan, so replacing it on the E53 should be simple.

As has been pointed out in Post #4, the level is okay if it is anywhere between the two marks.