Response & Question

Wpoll - I thought the "chain" system in the transfer case was eliminated by 2006. If that's not the case I too would think it's either the output shaft splines or the chain.

JoshDub - your suggestion of disconnecting the servo motor worked perfectly! The only warning light is the 4X4 light. Now I have a RWD X5 - at least until I can gather the cash to fix it or sell it. Thanks for the suggestion!

All - My questions now that I've disconnected the servo motor are there any issues with leaving it disconnected?

Based on my reading it may affect ABS and/or DSC. I live in So Cali so there little likelihood of venturing out in sand, snow or ice! Our X5 is really to haul our Great Danes.

Thanks to all for the help!