Can anyone recommend a tow package/kit? I have a racecar I will need to tow to the track this summer. It will probably be 3,500 lbs fully loaded. Few hills.

I would go OEM, home-install and pay to have your SW updated. The hitch package itself can be had for $470 from online OEM sources.
Your labor is free and I don't know
what the coding costs but it should be quick and simple

Do you have to have the vehicle coded once the hitch is installed? I've read the coding is just for the backup camera zoom or is there more that the coding does? Any details about this would help. I just picked up my OE BMW hitch kit for $409.00

Who sells it for $409?

For $100 why worry what the coding does (trailer anti-away, PDC off, maybe different shift map, backup zoom, ...). Just do it .

Ebay has them. I got mine last week form a dealer in Maryland. I wish my dealer only charged $100 bucks.. They charge a min $150 for anything now.. needless to say they own the only 2 bmw dealerships around me. I still have to have it done regardless, but seriously I'm sure it takes them 15 min to do it.

Very different shifting map that i hate even more than the regular. In city traffic I drive it in manual mode because the engine revs over 3000 rpm for no apparent reason.

So your saying that X5 models with hitches have (or could have) different shift patterns than the non-hitch models? Can you elaborate on this? If the vehicle had a "tow mode" I could understand delayed shift patterns when towing.
Or does the vehicle sense when a trailer is hooked up and changes shift patterns.. I appreciate your response, but it is very vague.

It senses when it's hooked up.

That makes more sense that the shift pattern changes when it's hooked up to a trailer.
I'm sure the trans shift patterns have been mapped for the best combination of hp/tq for towing.
Thanks for all the info!!