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The transfer clutches are in the end of the transmission. They are controlled by the duty c solenoid. When the vehicles senses wheel slippage the duty c solenoid closes allowing the fluid to drain out of the area allowing the clutches to engage and drive the rear wheels. When the transfer clutches or duty c solenoid go bad you will feel "torque bind" when taking a tight corner like backing out a parking spot or doing a 3 point turn. Basically it will feel like you are in a truck that is in 4 wheel low range.

Subaru advertises having a full time all wheel drive system. This is true but only because of a technicality. The car is normally 90% front wheel drive and 10% rear wheel drive. This is only because the friction created by the moving fluid around the transfer clutches creates enough drag to drive the rear wheels slightly (10%) Once the car notices the wheels slipping it then closes the solenoid making the car 50-50 front and rear drive. If you Google subaru torque bind you will find a ton of pages describing the condition and its cure.

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Q: What is a transfer clutch in a Subaru legacy gt?
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