Well It happened to me. Damn. 4x4 inactive, actuator fail FIXED, 7 YEARS NOW
 

So I got this 4x4 inactive message, followed by 4x4 light, abs light, and brake light in red. It seems to reset itself after a while, and is usually gone when I first start to drive it. It returns after about 20 miles of driving. Sometimes more often.

I hear a funny, click click click, followed by what sounds like a winding noise when I turn the car off. Like something just disconnected and spun.

I am feeling that it could be the actuator. Can anyone point me in the direction of its location?

Also going to try to get my hands on a GT1 for further diagnosis, hopefully it is something as simple as all of my fixes have been.

Anything else I should check? Battery seems fine.

POST 13 is the solution. 04/01/2016, actuator flip still going strong.

It sounds like the actuator motor, lot of info here, this is where it is located.
# 12 on the diagram.

RealOEM.com * BMW E53 X5 3.0i Single parts f transfer case ATC 500

check alternator...and voltage...something could be demanding too much power

Yea it sounds like the actuator to me as well. Especially when I shut down without those errors, I hear that crazy click click winding noise, next startup, I have all the lights.

Car starts and drives with all functions working. Plus this isn't at startup. So no run down battery or anything. This happens after driving a while. But once this happens the first time, it keeps coming back all day.

When it first happened, I heard a crunching sound, like if you run over a plastic bottle. I was coming out of a tight parking spot, with lots of uneven pavement. Had to get on the gas a bit more to roll over the bs.

Second time it happened I was going about 90mph overtaking everyone on the outside of a left hander. On throttle all the time. I was getting a pretty frequent 4x4 blinking. Normal, first light, bing, 4x4 inactive. Shit.

Taking of, especially into a turn, is really exciting now. Lol. Do we have LSD in the 4.8is? I can't seem to get it to go sideways for more than a second. I thought this was the M spec of the Xs.

So what do you guys think, new actuator, or buy that brass gear from Italy? I mean gear from Italy will be cheap, but will it cause damage by not breaking like the plastic gear? Or is that plastic gear just a scam by BMW to get money out of you down the road? I can't make up my mind. I want to upgrade the car, but worried that the stronger gear might move the failure point into the t-case.

Has anyone ever try that brass gear?

You could always remove the actuator and turn the plastic gear 180 degrees to where there are teeth and see what happens.

Yea I am going to do that first, but I feel it will be short lived. Still worth a try I think. I am really itching to see it's condition too. Hopefully this week I'll get it up on ramps get it out of there. I've also seen some people say that the nylon gear cracks and slips in the usual failing gear.

When you check it see if the shaft with the worm gear has any side to side play, allowing it to skip

Good point, will do. If it plays, I will just buy a new one.

Did you ever change the transfer case fluid? And if you did, did you do the reset on the clutch packs? Given your GT1, I assume so.

I have often wondered if that procedure (or not doing it) has any impact on subsequent actuator failures.