The following quote is from
here (post #95 in link provided by Ratbag):
The FWD impression is when the centre diff wears out due to donuts, uneven tire wear, etc. Where the wet clutch isn't as effective in holding torque anymore. That's the extreme, though, as the Transfer Control Duty solenoid fails first and when binding is felt on high traction surfaces, the owner should replace the the solenoid immediately to save the centre MPT diff.
^This. Can’t be a “proper” centre diff if there are wear items to the point that you can get power only to the front wheels!
How else would the 2wd fuse under the bonnet work?
From what I can see in the parts diagrams from a Gen1 AWD auto Liberty and my MIL’s 2002 SG foz there is not a mechanical centre diff, just a set of clutch packs for the rear output. The front diff pinion shaft is directly driven from the drive gear clutch pack layshaft from what I can make out with different component diagrams. An exploded diagram of the whole transmission internals would be good to reference but I don’t have ready access to it if one exists. Also, the name is a giveaway: MPT = Multi Plate Transfer. Not a true mechanical differential.
So it seems from what ABFoz said, I had the operation of these rear clutch packs backwards or was getting my message across incorrectly. The Auto AWD system is not reactive, rather it “deactivates” full lock as needed depending on a bunch of variables. This eliminates it as a reactive system in my mind - but the fact remains, full drive to the front wheels remains when the rear drive clutch packs are so worn out that they provide little to no drive to the rear wheels. Hence why you can do the “diff lock switch” mod on autos!
Yes, I get that your SH could be different. It probably has a VTD that has a mechanical diff component that is a centre diff with torque control similar to the MTP setup. VTD = Variable Torque Distribution. Many things changed in the SH! I’d need to grab a VIN to checkout the rear transfer and extension diagram to see what’s there exactly.
This is a pic of the VTD unit:
^ MPT on left, VDT on right.
Cheers
Bennie