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Update: Still have torque bind, though greatly reduced. Only in slow tight reverse turns. No longer in front. Repaired all damage on clutch drive hub. Replaced Duty C solinoid. Drve hub was in need of repair as grooves were evident. Duty C was bad, I believe because AT oil light flashed 16 times and putting in fuse for FWD had no effect. Not even lighting FWD light on dash. After repair and still having Torque Bind, I put in fuse and got the FWD light on dash, and........no more torque bind. I might add the car drives great. Like a front weel drive anyway. Coasts way better. No ill effects. So what do you think? TCU? What the risk of driving this car for a while in FWD? Thanks for your patience all, Andy

Thank You All !! I am absolutely totally impressed with the advice and offers of help you people have offered up. Really - outstanding! I started to job this afternoon. Thus far it was as expected after reading this forum. Got the transfer case apart. Clutch drive hub showed the grooves in the side of the teeth. Using a dremmel tool w/1" diameter cutoff wheel (the side) I am able to remove the grooves. Does a pretty nice job. Ran out of cutoff wheels. Got about 3 hrs. in it so far. No hurry. Should recieve Duty solenoid tomorrow and finish grinding clutch drive hub. Hope to get it buttoned back up tomorrow. Any advice on tranfer case lube/treatment? Thank You, Thank You, Thank You......All of You, Andy

Cincinnati area here. Thank you all for the replys. Tires all same diameter. Looks like I will be trying the AT oil flush. Then on to the duty c and examining/working/replacing clutches. Confident yet unexperienced. Couple of questions (to start): Reccomedations on AT oil type, additives? 96, AT, 2.5 = Tranny type? Drum in extension housing? = clutch pak? Recommendations for parts supplier? Recommended parts list? Bandaids or duct tape for bloody knuckles? Wish me luck...I'm going in, if AT oil flush does not do the trick.

96 Legacy Outback, AT, 2.5. First noticed as binding and "clunking" noise from REAR when backing and turning (parking lots). Now have when going forward and turning at slow speed. Definately coming from rear. Feels like right side. Will slow car as it binds rolling at idol speed, feels like I am rolling over a rock. Prior to finding this forum, I carfully inspected all wheels, brakes, CV's, driveshaft, and bushings. Looked in differential fill plug, used wand magnet. Found nothing, no metal shavings,no leaks, excessive play, etc. So, I did what any normal male would do, I replaced the rear CV/half shafts. Problem still exists. AT Oil Temp light flashes 16 times. Fuse in AWD holder under hood does not illuminate any lights on dash nor help problem. Most of what I end up reading applys to front diff/trans. Rear diff. has no wires going to it. Correct? This would eliminate any electrical, solenoid, sensors, or the likes from the possible problem. Right? Codes? Winter is coming! I need any advice I can get. I don't want to take the rear differential out and apart unless I need to. Thanks very much in advance, Andy