DESCRIPTION:
SOLVED!
This was the center differential - aka transfer case. $1100 to fix at Boxer Subaru Salem, MA (who did a good job). But things like this shouldn't failing at 120k miles....and luckily I don't own this car any more.

Please note that this was NOTHING to do with CV joints as some users suggested - it is the viscous coupler.

Please help me diagnose what the noise is.
2004 Manual Transmission Subaru Outback. 2.5