If it was a flaw, it would have happened since day one? Otherwise, something must have been worn or damaged over the years to cause this problem now. So I guess you can't really blame the service department for not getting it fixed for free. You can always try another dealer. Maybe an independent mechanic can get this fixed for less. Or you can take a picture of the problem and post it here, perhaps someone here can help. I had a 98 Legacy GT, I am not sure if it was the same style as yours, I didn't have the same problem you do.
Citydude