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I pulled my 240D diff when I replaced it with the 2.88 from a scrapyard. My 240D has 242,000 miles, and the diff fluid smelled BAD too. The 2.88 did not, but I replaced it with Redline 75W-90 NS.
And you need a 14mm hex socket (Allen) to get the plugs off. Get a good one, those plugs are TIGHT! - I needed my 1/2" 3 foot long breaker bar on the socket to remove them.
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