I've used Nokian Hakkapeliitta's to great effect on both my 1998 Audi A4 and current 2005 X3 for snow. Expensive, but they were damn well worth the traction.
Currently, I'm trying the cheap route with the General Altimax Arctic. Got them last year but had next to no snow to put them to use. Still 10/32s on the tread to start this season so I'm waiting to see if they are as good as the reviews say.
For wheels, I lucked out this year and found four wheels that were a near perfect fit for winter use on Craigslist.
Our stock wheels are;
X3 E83 = PCD 5x120, centre bore 72.5mm and ET46
First generation X5 17" wheels might be ideal if you find them, barring that, many 17" wheels from the 3 series in the early 2000 series years may work as well.