Strongly recommend 2004 onwards. That takes you out of the 4.6 option, but either the 4.4 or 4.8 are good. An extra gear, the x-drive AWD system, and the engine power and efficiency upgrades all make it worthwhile.

Only consider the OE BMW hitch. While the Drawtite hitch itself may be rated for 6000 lbs, the X5 is only rated to tow 6000 lbs with the OE hitch. It is easy to build a receiver, but what matters here is how it attaches to the unibody X5. The BMW hitch ties into the longitudinal box sections in the unibody, replacing the collapsible bumper struts, instead of just bolting to the rear pan.

I would use OE electrics as well, as I like the fact that they are integrated, they turn off the rear PDC when the trailer is connected, and you get the benefit of the BMW Trailer Stability Control function in the dynamic stability control. This mode uses individual brake applications on the tow vehicle to stabilize trailer sway if necessary. If you get the OE hitch, you can get the electics and hitch in a kit that is cheaper than buying them separately.

The OE electrics don't include trailer brake controls. BMW doesn't make a system for you here. Use a Prodigy, or other. Read the article on this site on installing an electric brake control, as the vehicle isn't pre-wired for it.

Any specific towing questions, fire away. Good luck in your search.

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2007 X3 3.0si, 6 MT, Premium, White

Retired:
2008 535i, 6 MT, M Sport, Premium, Space Grey
2003 X5 3.0 Steptronic, Premium, Titanium Silver
2002 325xi 5 MT, Steel Grey
2004 Z4 3.0 Premium, Sport, SMG, Maldives Blue