Originally Posted by WoodsWagon
Take a close look at the center diff to make sure the rear snap ring didn't pop out. It's a 5" or so dia snap ring and when they come out the end up going through the rear transfer gears. Spring steel snap ring vs hardened gear teeth = no bueno.
The rear transfer housing is pretty isolated from the rest of the transmission. I would have flushed a bunch of brake clean through and out the front drain plug, cleaned the magnet off, and run it. It's an in-car fix at that point because you don't have to pull the trans.
Make sure they know it takes the WRX only 1.1:1 reduction rear transfer gears, not the 1:1 ratio that every other subaru uses. Otherwise you will get bad binding when you try to drive it.
If the snapring didn't cause it, donuts or powersliding from loose surfaces onto pavement can do it. So can vicious launches.
You win the prize - snapring failure. Impressive diagnosis. Major carnage...could have done without the rebuild.