Hi Dave,
I know this is a 10 year-old post, but I joined Ultimate Subaru after reading some very helpful info from you.
Here's hoping you're still around...
I've got a 1998 AWD Legacy Lancaster auto (I think it's the Japanese version of an Outback) and I have front wheel drive only. I've tried putting the FWD fuse in, I get the FWD light on in the dash, but no change.
One clue is that if I accelerate hard I occasionally get a thump and a quick momentary change of attitude in the car, almost as if the rear drive kicks in for a second.
I can't see or hear any evidence of mechanical damage inside the transfer case, and the driveshaft turns the rear wheels fine by hand.
When one side of the car is jacked up and I put it into (any) gear, only the front wheel turns.
Any advice to get the 4WD working again would be greatly appreciated.
I suspect someone has figured out a way of switching something to enable 2WD on the road, saving fuel, and 4WD off road.
Cheers,
Rick.