The dealership was not willing to budge on the labor time for the thermostat and they were adding almost an hour of labor for replacing the upper hose that I felt was unnecessary. I would have happily paid them to do it if they would have dropped the labor time down to the actual time they were going to spend replacing it. They also quoted me on the replacing the rear brakes ($558) and front sway bar end links ($288). I though the quotes were a little high but reasonable since it is a dealership, I am not against the dealership making an honest buck and I am sure that they do great work. However, I really felt like they were trying to hose me on the thermostat. So I have decided to do it myself. So for the $397.00 dollars that I felt they were overcharging me they lost about $1,800.00 dollars in business.
Another member tacaiflift http://www.xoutpost.com/members/tacairlift.html posted some really detailed directions he found on replacing the thermostat only. The second half is in dutch but if you run it through Google translate it puts it into English.
http://www.xoutpost.com/bmw-sav-forums/x5-e53-forum/83480-thermostat-only-replacement.html#post843566
I have bought a new thermostat from NAPA for $65.00. It looks less challenging than changing the thermostat on a 328iC which I have done before. In addition to the thermostat, I am going to replace the left and right front sway bar end links. I have bought both of these for about $80.00 from ECS Tuning and they are BMW factory parts. The dealer price on the two end links was $158. I have also bought the upper and lower radiator hoses from ECS. Both of these I purchased for less than $100 and they are also BMW factory parts. The dealer cost on just the upper hose was almost $100. ECS has got some really great prices, but there is a one to three day delay on getting BMW parts shipped.
I also decided to buy a premium membership to Xoutpost for $35. If I replace the brakes, sway bar end links, thermostat,the upper radiator hose and lower radiator hose I will save myself almost $1500.00 . I would not be able to do this with out the information that I received from this forum. I think it's only fair to give back to the site and help support it. Thank you everyone for all of your help.