A Magnetic Bearing Wheel (MBW) with inclined magnetic poles has been developed. This paper deals with dynamics interaction between a satellite and the MBW. In the MBW-satellite system, the MBW rotor is coupled with the satellite by magnetic bearing forces and torques and there is some possibility that the magnetic bearing controller makes the satellite nutation unstable. In this paper, equations of motion of the MBW-satellite system are formulated by Kane's method and based on the stability analysis of this system, it is shown that both cross feedback control of rotor gimbal angle and integrator in the ordinary magnetic bearing controller are instability factors of the satellite nutation. However, this nutation is stabilized with cross feedback control of the satellite angular rate estimated by a minimal order observer from the magnetic bearing control torques. The effects of the disturbance feedback controller in our 3rd report on the system stability are also considered, and the results show that the system stability is not affected by the disturbance feedback controller.