I just had the same thing happen to me and I found this thread and sent my drive shaft to racemailibu572 and he put a longer spline on the end. He provided very quick turn around.

http://www.xoutpost.com/bmw-sav-foru...ft-flawed.html

I didn't have to replace or rebuild my transfer case so I ended up with a solution for less than $800 including the towing and repair by my local AMMCO garage.