All E53 4.4i and 4.6i have equipped with self-leveling system in rear axle as standard equipment, they are all auto-adjusted. 4.8i is equipped with two axle leveling system, which is on rear axle and front axle, and it is adjustable manually.

Regarding the error message, there are two level senors and one air supply control unit you need to take care of, the two level sensors are installed on two wheels on rear axle, the control unit is installed in the trunk beside the battery. I guess you might encounter the failure of the air supply control unit. Just have it checked, you may need to replace it. Is you X5 fully elevated on one side or both side? If it is only one side, then the problem might be the level sensor, if it is both side, then the problem might be the air supply control unit.

I have a 2001 x5 3.0. I did not see any compressor or cables, just the battery. So I guess that I don't have that suspension. However, I do notice when I turn on my headlights (hid), they do go up and down during the first few seconds after turning them on. I thought that this might be related to the suspension, but I never felt the car moving.

All cars with factory xenon have to have auto leveling headlights, so that is what you have

Get this checked out yet? I have the exhaust same issue, the truck looks fully elevated in the rear and my selflevel light comes on, i check the code and it comes up with the right rear height sensor, but im also having crazy squeeky noises there as well.

Did you ever figure your issue out?