I have rebuilt transfer cases before, but never on one of these. In general, it's VERY simple compared to a tranny or even a differential. First question...are the parts readily available for one of these cases? Seals, chain, ouput flanges, etc. (if that front flange gets damaged by the too short driveshaft)???

But I'd be 100% sure of the diagnosis before tearing into it. Or spending $1,500 for a rebuilt case. I'd also bet that anything other than the bearings is pretty costly if you're going to tear it down yourself, but still a good choice to DIY.

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2014 BMW 328i Xdrive
2011 BMW 335i M-Sport
2008 BMW X5 4.8i Sport
2000 BMW 528i 5sp