My understanding is:-
Car is normally only 2 wheel drive to the front wheels but drive is always being taken via the bevel gear to the front/rear prop shaft which is connected to the bevel gear and to the front of the haldex unit. Inside the Haldex unit are a series of clutch plates which are controlled by a series of hydraulic valves. These valves are controlled by the DEM which is an electronics component attached to the Haldex unit. Associated with the Haldex unit is a hydraulic pump ( which can fail) and a filter ( which can block). Inside the DEM electronics casing are a pressure sensor and solenoid.
Sensors detect when a wheel is rotating at a different speed front to back and depending upon haldex series fitting, the pressure in the haldex locks the clutch plates together, and allows drive to pass through the haldex and into the rear diff and then onto the rear wheels. This locking of the haldex clutch is either within 1/16th of a wheel rotation or if a later series Haldex is fitted "instantant traction"
Issues with the system are usually associated with lack of mantainance as Volvo maintain parts do not require service. But Haldex oil and filters should be changed to preserve the pump. Pressure valves are another fail. However, due to the exposed position of the DEM water/salts etc can penetrate the casing and wreck havoc with the electronics.
Parts from Volvo aint cheap, fortunately 3rd party help is available.
I'm not 100% confident that the above is 100% correct but I believe what I've said is a good laymans guide to how it works.
Cheers
Bob
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