Did a little more internet research and learned of an identical problem which ended up being a lazy diode in the voltage regulator. It didn't function when cold, but worked fine after a brief warm up period. I see the E53 voltage regulator has a separate part number and can be ordered separately for 1/4th the cost of an alternator assembly.
The question I have is specific to the E53, can the regulator be changed with the alternator installed or does the alternator need to be removed?
2014 BMW X-5 xDrive 35i F-15
2006 BMW X-5, 4.4i N62 engine E53