Back to the OP... Drove my call all of the holiday weekend, well over 300 miles and the red signal on the temp gauge did not return... I guess at this point, do you all think i should leave well enough alone for now until it happens again? I have many other things to work on, main one being change of valve cover gasket. I will tackle that and go from there.

I'm quite sure you experienced the bug. If it happens again you'll know it is the bug because the temp will magically become normal when you power cycle the engine.

Perform a reality check (expansion tank didn't explode, no puddle of coolant and no steam coming out etc) after turning off the car then start it back up and the needle should be at noon again.

My car did it once in 40,000 miles.

Just check coolant level every day for 3-4 days and see it you are losing coolant. If you are you will need to find the leak.

OP said no leak implied coolant level is full but didn't say explicitly.

Definitely confirm coolant is full but I'm quite confident you just tripped the non-gauge bug. I can try to pull my DME firmware number you can compare with to see if they are both original. I couldn't find the fixed DME firmware for the X5 not sure how compares to the M5 /5 series mentioned in the bulletin linked above.

I had thought the bug was tripped when ambient was cold as what happened to me but I think it can happen at any time.

Symptom is simply that the temp "dial" indicates overheating when nothing else corroborates this and simply turning off the car and restarting it will set everything back to normal. It's a known issue that can be resolved with a DME firmware flash but with the fix as simple as every 50-150,000 miles turn the car off then back on it's pretty low on my to-do list.

Again, I am not addressing the cause of the problem. Only the troubleshooting and precautions to take until the cause is confirmed. I understand your position is that the cause has been confirmed. I am not agreeing or disagreeing. Since the problem is no longer present, I don't think there is anything that must be done other than, as a precaution, monitor the gauge and coolant level.

Yup I know. I'm not sure if he made sure coolant is full just was suggested. I'm just a little annoyed at the seeming lack of understanding that this particular incident was almost certainly resolved by my first reply but there are all sorts of tangential trouble shooting etc. Not that those aren't general purpose useful things.

The issue that started the thread "random erroneous overheat on dash but engine not hot" is a known (not well known) bug in the DME of more than one BMW model line and was pretty clearly what happened in this case.

People who drive X5 should be aware that this bug exists and if the temp shoots up to red to check to make sure the coolant didn't just blow out but if the car doesn't have secondary indication of being over heated simply reboot the DME and the bug will clear and the temp non-gauge will report normalish (straight up pointer).

After 1 minute of verifying the car didn't vent the coolant it's laws of physics impossible for the temp to drop to normalish so if that set of conditions has passed you just experienced the overheat "gauge" bug. It will likely never happen again I don't know if even BMW knows what condition will bring it on.

OP here.

I drove several hundred miles and had no issue. Coolant is full. So guess what, I am driving again in the Lincoln Tunnel and about 3/4 of the way through, not thinking about it, I hear ding! and sure as sh!t, its the coolant temp and gauge pegged to red, again in the same exact place as the first time. I get out of the tunnel (in less of a panic) and pull over. I pop open the hood and make sure the main fan is turning, blowing on the rad. It was. Temp gauge went back to noon very quickly.

I do not believe this is a random bug. The air temp in the tunnel was HOT, like in the 90s, it felt hot. When the cooler air hit the radiator outside the tunnel things went back to normal. So what does this mean? Something about my cooling capacity is weak? Poor circulation, weak pump or a crushed hose??? Is my fan not spinning up fast enough? Air in the line?

Just a reminder, I did recently replace the expansion tank before this happened the first time. I also changed the tstat below the tank with a BMW factory part.

Coolant Temp Warning - pegged to red. Holy crap.
 

There is a huge difference between went back quickly and instantly recovered.

If the bug happens the actual engine temp is normal the gauge is just reading wrong and will instantly return to noon upon restart.

If there is an actual problem with the cooling system a restart will not reset the temp gauge. If the needle is right of noon upon restart and it takes any time to recover it's a different problem.

Temp high that recovers on its own hints at a sticking thermostat.

Use test 7 to monitor temp live and drive that same route to try to reproduce.

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yes - I think I said it went back down over like 15 seconds or so, once the colder air was hitting it. Okay, tstat sticking could restrict flow.

I am not really sure about how to get into test #7, which you and other keep talking about. Thanks.

The thermostat in the bottom of the expansion tank is for your automatic transmission so don't assume that will affect your engine temperature. The ambient air in the tunnel compared to outside the tunnel should not affect the cooling either.

Here is a video explaining the hidden menu. Go to test number 7
https://youtu.be/cO_tBe58ew8