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Originally Posted by Jonn335
This is a very good point which anyone wishing to add an LSD of any sort needs to consider.
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How an LSD works with the stability and traction control is a bit of a head-scratcher. It seems like the stability control will brake one wheel or another to stabilize the car, but ultimately will not cause the wheel to change speed dramatically in comparison to the other wheels. The braking forces applied cause restabiliation of the car onto its intended path (to correct the oversteer or understeer). An LSD would not dramatically effect this action of the DSC.
In the case of traction control, as others have stated the LSD would prevent the need of the computer to slow a spinning rear wheel (compared to the other rear wheel) since that is the whole job of the LSD. Turning off the tractions control would allow just stability control and prevent your tire spinning from looping the car.
Any other comments from folks who know more than I do on this topic? it is a huge consideration in buying the 335i vs. the upcoming M3 (I HATE open diffs).