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528xi Steering Issue
I can't imagine why a transfer case problem would manifest itself in the steering, although you should change the oil and reset the adaptations.
You could do the turkey baster method on the PS to change out some of the fluid instead of a full rack flush just to see if that improves the shudder, although if you are getting the VTG life minder warning, your car is up there on miles and it may just be the PS pump going. The PS bomb always seems to have fluid seeping out of the connections, so I'd say that is pretty normal.
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