[Ski1]

On my 330D there are 3 modes.
Normal - DTC on
Restricted - one press of button
Off - hold for 5 seconds - shows DTC off.

What level and sort of protection is offered in the middle setting for road or track use?

It seems to offer some traction control protection - but this is not really covered in the manual.

Advice based on experience or knowledge of system operation most appreciated.

[shirtpants_]

I think the "restricted" mode your referring to is the TCS-off DSC-on mode. DSC stands for Dynamic Stability Control
My experience:
Lets you put power down without cutting power dramatically.
Lets you have a little bit of slip/slide, before it reels you in.
I've had one or two experiences in the wet, where it did not kick in until very very late, and the car was very sideways at 70 or so miles an hour. IDK if it was me or DSC that brought the car back in, but the loss of traction was very sudden. So I wouldn't drive like a complete idiot with TC off, expecting DSC to always save your bacon 100% of the time.
It's not anywhere near as good as the M-dynamic mode or whatever on the M-cars, but decent IMO.
I would pretty much take TC off , and leave DSC on for "spirited" street driving.
This is my experience without a mechanical LSD, so YMMV if you've got one.

[Ski1]

thanks - very handy

[gavronm]

I will second what shirtpants said and chime in only to note that in my experience with my 335d the behavior of the system is the same on a diesel.