4x4 only light on -- I don't think it's the usual suspects--

[Staletuna]

Hello guys,
I have a problem that I can't figure out.

I have a 2006 X5 4.4 175,000mi

About a month ago the yellow 4x4 warning light began to illuminate randomly then go off after 20-30sec, nothing seemed to be wrong.

Then two weeks ago it started coming on every time I accelerated and I could feel a small kick or jolt when the light would illuminate.

I have a scan tool (Foxwell 510elite) and pulled the codes,

5EB1 DSC: Steering-angle sensor. supply
5F42 DSC: Transmission control, limp-home operation
5DD0 DSC: Control Unit, overvoltage
5DEC DSC: Transfer case malfunction

I have owed this E53 for 3yrs now and this is the first time I have pulled the codes since I purchased it so I am not sure how long they have been in there. I did a battery last year and programed it but I don't remember codes then.I cleared them and after a few days of driving with the 4x4 lighting every time I leave a stop light the only code to return is

5DEC DSC: Transfer case malfunction

I checked the usual suspects

-The transfer case actuator gear was replace 20k ago, and I can run the actuator test and it doesn't click when the truck is turned off.

-I can see the Steering angle sensor sweep thru 620 to -619 smoothly

-I can watch the DSC sensor (YAW) move as I do circles in the parking lot.

-All the wheel speed sensors are reporting and all 4 read the same.

It seemed to drive Ok so I was just driving it that way.

-------Then it snowed-----

I got stuck at the bottom of my hill
The 4x4 works at idle and up to about 5mph then the jolt I was feeling is the actuator pulling back(I could watch this with the scanner) and I completely loose any power to the front wheels.
Once I finally inched my way up the ice hill idling, I decided to just double check the T/C gear. I took it off and I would say it was 10% worn I spun it 180 and put it back in then went for drive. STUCK AGAIN.

Now I get 2 codes

5DEC DSC: Transfer case malfunction
55C4 No message from DSC

Still only the yellow 4x4 light.
The ABS and the DSC work. Going down the ice hill the ABS and stability control work to keep me straight.

I again went thru all the modules to see what wasn't talking to the GM and all looked ok. I cleared codes and the only code to come back was the
5DEC DSC: Transfer case malfunction.



Any insight or further trouble shooting suggestions would be appreciated!!

Thanks