Makes a sound like it is dragging on the ground and the car will barely move forward

Car: Subaru, Outback, 1997, 2.5 liter - Back to Fix-It - Subaru Repair Manuals

Q.1997 Subaru Outback. 2.5 liter. automatic transmission. Makes a sound like it is dragging on the ground and the car will barely move forward. After car sits will drive normal for awhile.
Will move normally if transmission is dropped into low 1, 2 or 3 or reverse. Happens after driving for awhile. No check engine lights or error codes in computer. Subaru tried a transmission flush and it didn't help. Is it time for a new tranny??

I already checked/done: Dealership flushed transmission. Thinking of taking it to AAMCO to get it checked.

Answer Would be helpfull if you could have identified whether its in the main box or transfer area, however it sounds to me to be a collapsed epicyclic gear train or clutch pack.
Unfortunately when this happens there is a tendency to splatter metal all across the tranny hence there probably wont be much you can salvage. You would be better off with an exchange reconditioned unit as this gives you some warranty instead of a wrecker unit.

Addition Thanks for the great info. One more small question to clarify. Would this still be the problem if I can drive the car and it only happens sometimes?

Answer The thing is you and me at the moment have no clue the amount of damage thats occurring.
I would not advise you to drive the vehicle and then the next thing it breaks down where you wont be able to get assistance at all. If you could get it fixed and you will be safer and at will be less inconvenient.

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Makes a sound like it is dragging on the ground and the car will barely move forward