I bought a '98 Impreza AWD for my daughter a year ago. It needed some work, but seemed OK for the price. Last week, she called from a friend's house. There was a thumping coming from the right rear. She initially thought it was a flat tire, but none of the tires appeared low. I couldn't see anything wrong, so I took it to a shop. The mechanic said it had an issue with the rear, which should be replaced. Then he added that the trans needed to be rebuilt, because he could turn the driveshaft 3 times by hand when the car was in park.

I've been nosing around over at NASIOC, but don't have posting privileges. I was reading the differential FAQ, and saw that they actually have 3 differentials. Could this be why you can turn the driveshaft when the car is in park? If it just needs a new / rebuilt rear, I will get that done, or maybe even swap it out myself. If it needs a trans rebuild, it's really not worth putting that much money into this car...

Thanks for any help!