Here's a picture of the axle housing and the o-ring that I referred to.

http://www.leebmann24.de/media/catal...2/127416_1.JPG

Item 8 is the o-ring. but you should also replace the seal item 7 while you have it apart.

That's not engine oil that is leaking out, but differential oil.

I'll have a look but gear oil has a very unique color, viscosity and smell. All of which this doesn't have. I'll 99% certain it's engine oil.

http://www.xoutpost.com/attachments/...il-leak-1-.jpg

The location of the leak base upon the Original Poster picture is probably the o-ring between the oil pan and the axle housing. The cavity in the oil pan through which the axle passes through is not DRY. The cavity is filled with differential fluid. If the cavity was dry, there will be no need for an o-ring or seals at the axles.

I am also having a "mysterious" leak in the same location. Over the weekend I cleaned everything off and then let the motor run for a while and rev'd the engine. did this a couple times and no leak. Then drove the car a little and the leak was on the garage floor. Mine is dripping off the housing and through the first opening in the metal skid plate. My only concern is that I thought differential oil is incredibly smelly and me and my wife (she was very pleased when I asked her to smell my finger) thought it didn't smell. I pulled the dip stick and we both concluded that the oil smelled completely different. Is there any other way to verify motor oil vs. differential oil? Or am I over thinking this and should I just replace the seals?

I do not recall any discussion of the engine. If the M54, then the valve cover gasket is high on the list of usual suspects. Oil can run down the side of the engine and drip off of anywhere that is a low point. Having said that, the oil from the valve cover gasket typically falls onto the exhaust manifold.

On second thought, I agree with the diagnosis of the O-ring that the others have called out.

I might crawl under my X5 and look at this. My car is dripping small drops on the garage floor, about the size of a dime or a nickel.

It's the 3.0. I'm going to pull the fill plug in the differential and see if the oil is the same before pulling the axle and replacing the seal and o'ring. The oil leaking is very clean (just changed my oil) so I'm skeptical but there is no oil anywhere around this support...only the oil leaking from the bottom. Strange indeed.

Diff oil has a *very* distinctive smell, even a tiny amount stinks from the sulphur content. If you can't smell it, it's engine oil. Diff oil is also thicker and slipperier(made that word up, lol). My bet is this is engine oil.