Should I Replace Transfer Case for $3400?

[BMW_E53]

Hey All, last week my E53 got the 4x4, Brake, and ABS light displayed on the instrument cluster. Then it went away after constantly turning the car on and off to see if I could hear any noise beneath the car (which I sort of did). Anyways, the lights went off and car drove normal again but I decided to take my car to my Indy so they can run a diagnoses. My indy stated that they found codes stored in the computer stating that the transfer case motor is bad and the condition of the oil is also bad. He recommends that we replace the transfer case for a whole new remanufactured unit and the total cost for parts and labor will be $3400. What do you think I should do? I was thinking that I can just replace the gear with a new carbon one that many people have done and also replace the transfer case oil as well. However, he said that if the computer is stating the oil is bad then there is the possibility of metal shavings and other contaminants in the oil, and that simply fixing the gear for the motor alone won't last long.

So should I go ahead and let them replace the whole transfer case or do you think I can save thousands of dollars and just replace the gear and oil? Also I would need INPA to reset the adaptations for the transfer case oil right?

Also my X5 is a 2004 4.4i. Thanks in advance!