Two possible problems. The bevel gear comes loose and you loose awd, this is repairable. Take out the box, re-press the gear back onto the drive line.
The second is a real problem. The fluid gets burned, the gears heat up, the flid boils over and out of the box. The entire assembly is ruined beyond repair.
It is easy to R&R the bevel gear box. For prevention, replace the fluid every 60K miles or sooner. Use a MightyMac vacuum pump, it is easy to do.

Klaus
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The 164 has a new home, all I am left with are a 95 854T and a 98 V70R :)

You betcha I have experience on this one, in fact I get to remove one as soon as I go in on Monday morning, for free no less!!! The biggest problem with the angle gear repair is the simple cost of the darn angle gear, the rest is really simple, nuts and bolts kind of stuff. Just remove the axle that goes through it, unbolt the damn thing and pull it off. There is no adjusting or anything like that, just unbolt and replace, check the fluid levels and be done with it. Now as for what goes wrong with them, they leak and then because of the low to no fluid in them the gears get damaged and then the whole assembly howls like a fire truck going down the road. Back in the day they did not even authorize resealing them but have since made all of the tools and seals available to reseal one. I have not done any reseal work on them, appears to be real straightforward stuff, because every one that I have come across is already toast.

Mark