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Yup, u guys are right it is the rear diff, causing the noise. BMW NA also released service information bulletin for this problem. According to the bulletin the fluid should be changed with the FM booster, and driven until diff fluid reaches operating temp. Finally the tech "should" drive the vehicle in circles 20 times both ways; this allows appropiate break in of the diff. Bulletin states that grinding noise may still be present for about another 500-600miles.
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