Ok so from what I understand I need to change that gear ( obviously), that should take care of the 4x4 light but I also need to make sure , before I drive with the new gear , that the SAS is working properly. If not I need to either calibrate it or replace it.
My winter setup is probably not the issue here and was most probably coincidental?

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His : 2005 X5 4.8is (SOLD)
Hers: 2007 X5 3.0si (SOLD)
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Retired:
1999 518
2000 323i
2002 M3 (beautiful car)
2003 330Ci