Thanks for the great dialogue. I have been quoted $530 from the dealer and $500 from an Indy BMW specialist.l to replace the seal. It's mostly labour cost since the seal is only $25.

If I can find the special tools to remove the driveshaft and nut I'll do it myself. In the meantime I have replaced the fluid with slightly thicker 75w140 and will see if that helps. I'm not in a position to replace the diff in the event of a failure but there are some choices here.

Great forum everyone!