[sperry]

If the diff is locking too much, the car will get very pushy... especially at power on. I have my controller set to only 5% lock at low throttle levels in order to allow the car to turn mid-corner, and at 25% lock at full throttle to counteract the looseness that comes from stomping the throttle at corner exit. If you're pushy because of the diff, it means you're seeing more lock than you should. The auto mode is pretty good about making sure to release the center diff while the car is turning... but if you put it in manual that feature is removed, so at anything over 20% lock there will be binding, and even at lower levels you'll have noticeable handling changes, usually pushy while cornering and loose when stomping the throttle.

Half a quart low is actually quite a bit of missing fluid... IIRC the capacity is like 3.8 qt or so, isn't it? Any idea how it got so low? And I'm not so sure about the effects of low fluid on the center diff... it may be that there's no real correlation, and like ALM said, it's just a coincidence. But the center diff does in fact have quite a drastic effect on handling... so much so that I went from having a nearly undriveable car to setting the top PAX at Hawthorne simply by installing a DCCD controller so I wasn't running full-rear all the time. So if there's a way for the fluid level to effect the diff's lockup, I would believe that's your problem.

As far as damage... who know what happens when the diff is run low on fluid... hell, I still can't understand how the diff even works without catching on fire from all the friction of trying to run 50/50 lockup.