[Sjkane57]

The car sounds like a truck while driving. There's a bad bearing somewhere. When jacked up and in drive, only the rear wheels are turning. When one is held you can feel and hear what sounds to be a dry bearing. Differential? The front CV joints and wheel bearings feel good when spinning by hand. Can anyone explain why they are not engaging?

 

[Kurt_]

start with a code readout. check diff fluid levels, and the gears in the transfer case, particularly the plastic servo one.

 

[Sjkane57]

Thanks! I'll be getting dirty in a few hrs.

 

[Delta V]

Definitely start with the transfer case. It would really help you if you could put it on a lift, have someone in the driver seat and do a rolling test. It would tell you almost immediately where the problem lies.
Under what circumstance did the problem happen?

 

[Sjkane57]

When you say rolling test what do you mean? I had it up in the air and put it in gear and noticed that only the rear wheels were turning. When I would stop one the other would spin but never the front.

 

[Kurt_]

Well that rules out the rear differential. I'm guessing the front driveshaft isn't spinning either, in which case you're going to have to do the exhaust and such to get at the transfer case

 

[ggal625]

Based on your symptoms it could be the transfer case actuator gear.

https://axleaddict.com/auto-repair/BMW-Transfer-Case-Actuator-Problem-And-Fix

I've replaced the fluid in my transfer case, which is a joy all it's own. You have to lower the exhaust. Remove the heat shield. Support the transfer case with a scissor jack while you remove the transfer case mount. It's a definite PITA but I was able to do it lying on my back with the car on jack stands.

This article explains the steps:

http://www.pelicanparts.com/techart...ng/67-TRANS-Transfer_Case_Fluid_Replacing.htm

To remove the transfer case you'd then remove both drive shafts and lower it out.

There are lots and lots of google hits of these failures in X5's and folks removing/fixing their transfer cases.