is this my diff about to go ?

Jerking through the steering wheel, or resistance to the whole car moving forward.
If the former, I'd check your power steering fluid level. Any extra noise from the pump?

If the latter, deffo no wheels rubbing or CV joint clicks? Light flashing is just telling you TC is working.

Start cheap before worrying about the diff........but don't rule it out.

Sounds very similar to what happened to me a few years ago on my current car.

I have a 02 BAM Engine S3 and there was a time when if i reversed on either lock it would just stop/seize up on me and I would have to engage 1st gear and move forward slightly to then reverse it again - that was fun having to parallel park or reverse into a parking space!

It did do like you say and felt like the handbrake was on or something similar. However like you it was absolutley fine to drive with. Anyway I took to into Audi and they scanned it and nothing showed up, so I made them test drive it and reverse it and it did it. They did manage to reverse it but it made a fooking horrific sound and they didn't want to do it any further, however it was still fine to drive it normally. So they had to hook it up direct to the Haldex controller to get the readings of that.

Long and the short was a new Haldex unit to fix the problem, cost for the haldex 'finaldrive unit' was £1600.00 and other parts.

But I'd go on HTC advise first before you do the Haldex

I have a spare, low mileage diff if you should ever need one but I doubt it would be that (but don't rule it out obviously).

See if there are any fault codes firstly which may point you in the right direction but failing that, a process of elimination is king and as someone has already pointed out, start with the Haldex as they are a common'ish problem.

If it were me, I would firstly disconnect the Haldex unit (easy) then failing that I would completely disconnect the propshaft from the transfer box thereby effectively ruling out the whole of the rear transmission system, sounds like an involved job but really it isnt.