Thanks for the responses.
I've been going to Glenview, IL at least 1x per month since November and driving FWD rental cars. Admittedly these were pip squeak rental cars but they were all over the road in the snow. I'm going to go w/the AWD so the weather won't stop me from doing things. Maybe it's overkill, I don't know.
According to the Feds, the 535xi got 16 city/25 highway, combined 19 mpg when new. It's not bad, but above 20 would be better. I can live with 16/25.
Fuel Economy of the 2008 BMW 535xi
Re: the sport package, I understand it doesn't give you a sport suspension with the AWD version. And the AWD's ride height is a few inches taller. Maybe some Bilstein sport shocks are in order? Have to investigate this.
The plan is to drive 2-3 years until the warranty runs out and then trade it in/sell it.