One problem related to differential unit has been reported for the 1996 Subaru Legacy. The most recently reported issues are listed below.
The contact owns a 1996 Subaru Legacy. The contact stated that while driving 60 mph, there was a loud noise coming from the rear of the vehicle. The contact then noticed that there was smoke and flames coming from the rear end of the vehicle. The fire department was contacted and a fire report was filed. The vehicle was then towed to an authorized dealer where they inspected and advised that the differential failed due to the vehicle becoming overheated. The vehicle was not repaired. The VIN was not available. The failure and the current mileage was 255,000.