Subaru legacy wagon

you will likely need to replace the following:
Duty C Solenoid
Transfer Clutch Pack
Reduction gear
All of these parts are located in the tail end of the 4EAT automatic transmissions. The reduction gear can separate from its hub and damage the above mentioned parts too.

IT is a constant all wheel drive car which means that all 4 wheels are driven all of the time . There is a differential in the centre that allows for different speeds between front and back while driving such as going over bumps . When you engage the 4wd button you are in effect locking that centre diff so that both front and rear axles drive together. If you have it so that 4wd is not engaged (selected ) and there is no drive action to the rear wheels that then indicates that the shaft in that centre diff is not connected in the side gears ( stripped /broken) and it has been in 4wd all the time so that it could be sold

easiest way to tell if it is 2 wheel or 4 wheel is look under the car. From the front of the vehicle just off center (could be left or right) there will be a differential. (much like what you see under the rear of a pickup truck. If you see this it's a 4wd or awd. The difference between awd and 4wd is- 4wd is either front or rear wheel drive with the ability to (now days) push a button and "lock in" the other axel. Awd is at all times, all 4 wheels are working together to move the vehicle.

I have a 93 legacy. Subaru's always run in front wheel drive until a sensor tells the computer the front wheels are not turning the same speed as the rear wheels( spining on ice or sand etc.). At that point all wheels will be driven though a clutch to the rear wheels. This is not good if the car needs to be towed with the front wheels in the air! This "all wheel drive" can be shut down for towing. Under the hood on my 93, there is an in line fuse holder on the pass. side of car behind the front strut mount. Open the top of the holder and it will be empty, put in a fuse (10 or 20 amp or close) , this completes a circuit and shuts down the rear wheels. I don't know if the your 97 has this in the same place, but it must have one some place. hope this can help you.

check the gear oil level and condition in the rear differential. if you can rule out wheel bearings then this is what to check

there is a central diff(called a TORSEN diff)and yes it has splines on the output shaft.NOW this IS a front wheel drive car that goes into 4wd when traction to the front is compromised(slipping)they are not allowed to call it "quattro"or 4wd as its NOT.jack up the rear and block the front wheels,start the engine and put it into gear,the rear wheels should turn if the central diff is operating correctly.if not the best solution is to get a diagnostic done at a subaru dealer(you can then decide if you are capable of fixing it yourself or are willing for them to fix it)It is not as simple a system as some people would make out as you have electronics to control the front/rear traction.and the diagnostic computer they use is invaluable.AND EXPENSIVE.

This recently happened to my 98 Subaru Legacy Outback.
My problem is in the rear differential. May be the same for you.
When making a turn, the car sounds like a Star Wars T.I.E. Fighter. The outside wheel is not turning fast enough to keep up with the inside wheel or vice versa. AWD is disengaged and car is currently operating on Front WD. I was told this is fine to drive this way.

This transmission has a 4 wheel drive unit on the back of the trans this has a known fault which this unit could have, take to your local trans specialist and he will be able to verify and qoute, You also could check the fuse for the 4 wheel drive. normally in the fuse box under the bonnet marked 4wd or awd, this also would cause your fault.

Check the awd fuse first, if this is ok then it is likely to be in the transmission the awd section is seperate to the rest of the trans, it has its own solonoid pack which can be a problem. Take to a trans specialist for an accurate diagnosis if the fuse is ok. If the fuse is missing come back to me for further info

front wheel drive? may not be the enging may be CV joints or wheel bearing,