In side all Range Rover Transfer Boxes (Including late Range Rover Classic) is a part called the VCU (Viscous coupling unit) failure of these is common as it has a limited life span, interesting to note it's not only Range Rovers that are fitted with VCU's but many other 4X4 brands.
How to tell if the VCU is seized up:
Tell tale signs are scratch marks on front tyres (P38 not L322)), heavy steering, high fuel consumption and lack of power.
Also steering shake can also sometimes be included in this failure but not always, worn wheel bearings can induce steering shake.
Jacking up one side of the front axle and ensuring the hand brake is on along with Park if a auto is the correct method, set a torque wrench to 60lbs and rotate wheel forward by placing socket on the wheel nut, you should be able to turn wheel 90 degrees in one minute.
If its failed you'll find it will move barely at first and then lock up say at 45 degrees as the slack is taken up, if so then it's failed the test and a new VCU is urgently.
If your VCU did past the test consider the following to make sure it lasts:
Avoid heavy acceleration
Make sure the oil in the transfer box is a good quality ATF Dexron III, there was a update from Land Rover with regards to this which indicates that the transfer box is lubricant and temperature sensitive.
Also read "Bad oils and fluids" and "P38 Lube specs"
As the Transfer box has not been fitted with a external cooler it makes sense why ATF Dexron III is used.
At present we are investigating the possibility of adding a cooling system as these run to hot in high temperature climates like Africa and most parts of the Americas
The pictures below shows a failed VCU as removed from a P38, there is no visible failure to these as it is internal, these units are sealed and repair is not possible.
Brand new VCUs can be bought direct from Ashcroft Transmissions Ltd. vs Local and save yourself lots of money