2004 545i active steering malfunction

I have a 2004 545i with 67,000 miles (love the car), but last week, I got a malfunction warning... the "active steering malfunction" light came up on the screen.
I took the car into BMW and was told that the rack & pinion needs to be replaced....$4,500.
Has anybody heard/experienced the rack and pinion wearing out with 67,000 miles.
The dealer will not cover it....am I getting screwed?

If it's still under warranty I don't see why the dealer wouldn't cover it.

Yes you're getting screwed. If the dealer is saying it's a "wear item" like a clutch or brakes, then you're really getting screwed. It should be covered especially if the vehicle is that new.