There is little discussion of towing with one axle lifted, as X5 owners tend to prefer flatbeds, because then there is no question of potential damage. You don't actually need a flatbed, however, and flatbeds can cause other damage if not deployed carefully.
These are in the reverse order to your questions, for reasons of clarity.
1) For an x-drive, from 2004 onwards, you need to ensure than axles are turning at the same speed (or both stopped) when the X5 is being towed. One way is to tow flat on the ground, with all wheels turning. Alternatively, if you don't have a flatdeck available, then you need to use wheel lift equipment on one axle, and put a dolly under the other axles (so that all axles are stopped).
2) For pre x-drive, up through 2003, the manual states that you can tow with one axle raised, for a limited distance and speed. Weasel's point is that the two axles are joined by gears. It isn't a fixed connection, but rather a planetary diff. As long as the transmission is in neutral, I can understand that it would work (but it would spin the input shaft). As an example, your left and right axles are joined by gears as well, and they can turn relative to each other. It isn't all locked together like a 4wd truck, with the two driveshafts geared together 1:1, as the front and rear axles need to be able to turn relative to each other to prevent binding in corners. The centre diff is used to create a torque split (32/68 on early X5s, IIRC). Again, when towing with one driveshaft fixed and one turning there is a distance and speed limitation, as you aren't lubricating the transmission. To be completely safe, treat it as an x-drive, above.
Weasel may be able to chime in and clarify the comment, as to the accuracy of the manual and my interpretation.
Edit: The following refers to the New Venture 125 transfer case that my 2003 X5 had. This was a Chrysler/GM joint venture company, now owned by Magna. The operating description is lifted from another board.
The NV125 is a full-time, permanent All Wheel Drive (AWD) transfer case with a fixed 32:68, Front : Rear torque split. TheNV125 transfer case has the following features-:
Permanent AWD.
Single Speed (i.e. No low range ratio).
Constant mesh centre differential with 38:62
torque split.
3/8" Pitch chain with 35 Tooth sprockets.
Splash lubrication via chain rotation.
Weight 23 kg.
The transfer case has no external controls and requires no input from the driver to operate. The unit contains a centre differential that allows permanent connection of the front and rear wheels to the driveline to achieve constant all wheel drive. The major components of the transfer case are-: the front case half; the rear case half; the planetary gearset; the main shaft; the input and output shafts;and the chain.
The front and rear cases are manufactured from cast aluminium. Both cases are bolted together and provide the bearing locations for the main shaft, drive sprocket, planetary gearset and front and rear output shafts. The front case assembly also houses the mounting bush, which is connected to the transmission cross-member when installed in the vehicle.
The transfer case receives torque from the transmission output shaft. The transmission output shaft is connected to the transfer case input shaft via a 38-tooth spline. Torque (62%) to the rear output is transmitted via the input shaft to the carrier (which carries the planet gears) then to the annulus (or ring gear), which is connected to the rear output shaft. Torque (38%) to the front output is transmitted via the input shaft to the carrier, then to the sun gear. The sun gear carries a 35-tooth drive sprocket, which drives the chain. The chain then drives another 35-tooth sprocket integral with the front output shaft. Because both sprockets have the same number of teeth, the rotational speed of the input shaft and front output shaft are the same.
The fixed torque ratio is arrived at by the leverage ratio of the annulus (ring) gear of the differential over the sun gear.
Item Description
1 Rear Output - 62% Torque
2 Sun Gear
3 Chain Drive to Front Output
4 Front Output - 38% Torque
5 Input - 100% Torque
6 Annulus or Ring Gear