Ah... well then... I haven't had to deal with this myself so I'm just making educated guesses. But your computer has likely shut off your transfer case and therefore your front wheels due to the oil wear issue. At least, hopefully that's what the issue is. You could call the stealership up and ask them about it. They may be able to shed some light on whether or not the car is designed to do that for damage prevention purposes.

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2007 E70 X5 4.8i Sport Package
8x,xxx Miles
"My Precious" (Smeagol voice)