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1. If its leaking now change it or it will get worse, it has already failed.
2. $3.5k is a lot but that is the trend with the s63 in general ... I would recommend doing both while your in there DIY shouldn't be too difficult maybe a 5/10 on difficult scale just a bunch of things to take apart to get there.
Should also replace gaskets #5 and O-ring #12 while you in there as well.
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2012 X5M - M5 S63TU Turbos/Manifolds, Custom Exhaust, Intake, JB4/BCM, OEM race stripes
1999 323 - M3 Clone - Hardtop - S50 Cams, S52, 3.23 LSD, Koni Sport, 18' E46 M3 Wheels
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