Update:

So I replaced the gear ( I couldn't resist and went with the new gear).

The 4x4 light (DSC) still turns on but AWD actually works. The system doesn't deactivates the AWD like it use to. The ABS works also now (and the light is off) . The only thing that doesn't work is the traction control. If I press the DSC button for a few seconds , the 4x4 light will reset and turn off but a few spins in the snow and the 4x4 light will turn on again and disengage the traction control.

I've also noticed that when I reset the DSC and have the 4x4 light turn off , if I just turn my steering wheel fully left , the 4x4 light turns on instantly.

I know I'll need to clear all the codes and see what new codes pop up but from the description above can we start pin pointing something?

Thx

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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