X5 diesel jerk in first gear

Hi guys,

New to forum, hope you can help me.

I have an x5 diesel, 2007 model (e53). Last week the car suddenly jerked badly, and the 4x4, ABS and traction control lights came on.
When the car was switched off and restarted the lights disappeared, except for the 4x4 light. Started the car again, and that light disappeared too.

Since then there are no lights showing, but the car has a slight jerk after pull off in first gear. Once the car chanegs out of first it drives normally. BMW recons its the transfer box, and want $4,000 to fix it. They claim its possibly caused by the fitment of non-standard (Michelin) wheels! I live in an area where it doesnt ever snow or get serious thunderstorms, the vehicle is not used off road etc., so the traction control light has never come on since vehicle was bought. It has 160,000km (about 100,00 miles) on.

Any idea what could wrong with the transfer box, and whether its necessary to replace the entire box or is there a simpler fix to sort the issue out.

Much appreicated.