I just did the gear replacement and since there is so much information spread out around the internet and in forums on this topic I created a post to try to consolidate it (see below). So far so good, it fixed the problem no more warning lights and no more clicking when I turn off the car. I chose to replace the gear with a new one rather than risk it failing or slipping back into the worn out portion of the gear, my reasoning being if I was going to spend a Sunday working on this I didn't want to ever have to repeat it
I included my photos and the 3 best videos I found on the problem/replacement:
BMW Transfer Case Actuator Problem And Fix
