Lost rear traction on 03 Impreza AWD
I have the same car. Mine is automatic. What is yours?
1/ Is the FWD on the dash panel lit up? This will tell you that only the front wheels are engaged without power to the rear wheels. The manual tells you if you have a flat tire in your car, you have to make it into a FWD by inserting a fuse in your fuse box. Check and see if the circuitry isn't shorting out your awd which is making it fwd.
2/ Because the car has open diffs in the front and rear axles, you (or your friend) might see only the front wheels spinning and not the rear wheels. The power is transfered to the wheel with lowest resistance. With the front wheel spinning, one of the rear wheel(s) should also spin. Might not be a solution but maybe you can't see the rear spinning wheel because it's spinning on the other side.