I just went through something exactly like this with my 620i. I suspect that your front diff is the problem.
If yours works like my 620i, then in even in 4WD the front diff should basically free-wheel unless the rear wheels are turning faster than the fronts (such as slipping in the mud), then the fronts will engage to pull you out of the mud. The problem I had is that the front was engaging when the rears are not slipping (even when 4WD was not active). Since they are geared differently, this leads to the problem you are describing..binding up feeling in the front, like the brakes are on, since the front tires are trying to turn slower than the rears.
To fix this you need to remove the front diff and take it apart to see what the problem is. It could be as simple as some dirt inside that is causing the diff to engage when it should not. That is what my problem was. After a good cleaning and some fresh gear oil it works great.
I bought a repair manual online for $20.
It is not a hard job to do. A manual will help you understand what is inside that diff and how it all works.