Tom I think it there is confusion on the C solenoid. The one on the US model is different to the VTD model. I have written about it before some where. The one in yours, turns FWD, when on full signal. With no signal, the transfer clutch is full on.
The VTD is the opposite, no pressure with no signal, full pressure with full signal. The difference is in the C solenoid, the US one is normally closed. The one in the VTD is normally open. I guess that this was to allow the units to "fail safe" differently.
Yours defaults to 50/50, ours to no Limited Slip Clutch.
This the VTD unit, but your hydraulics are the same.
You can see that the C solenoid bleeds off The yellow pilot pressure, to reduce the pressure on the transfer spool valve so that the spring can move it across to turn the RED line pressure off the transfer clutch.
For it to bind, either the transfer valve has to stick in the on position, or the C solenoid is not fully bleeding off the pilot pressure, to hold the transfer valve on.
It your case I think it is the C solenoid that is not opening fully. Maybe it has a mechanical problem to prevent full armature travel, or there is some foreign body stuck in it preventing full travel. There is also a chance that the duty cycle signal is reduced by a resistance somewhere, though I don't know if the TCU could detect that, to post a code.
Harvey.
