1st off - welcome to the forum. I'm currently looking for an X5 as well, though newer than what you're after.
If you're wife wants her X5 to look 'exactly' like the one you posted (20" wheels - style 214), the only 2007/2008 model with those wheels is the the 4.8i (V8). Mileage is rated at 14/19. Of course you could always find a used set if you bought one w/o those wheels. The 3.0 N/A I6 motor is rated at 15/21 for mileage...not much better than the V8.
You say you want the biggest engine available...obviously the V8 is the way to go with 350/350, while the I6 is 260/225.
How many kids will your wife be driving around? Do you need a 3rd row? If yes it's extremely cramped and not well suited for kids above 10 or 12, IMO. My girls are 7 & 9 and I had them climb back there on a vehicle we were looking at, and they couldn't get out of there fast enough.
As noted above I'm looking for a newer model so I haven't researched the 4.8i much (it's last year was 2010), but I have read some good, and not so good posts on here about the 4.8i in regards to reliability. Maybe some owners can provide their input though...
Hopefully this helps...I'd just spend some time on here searching through the various threads....lots of good information here
