The noise you describe sounds like a bearing but I can't see why it would bring a diff light on , does the d4 have some kind of active diff with limited slip control .
If you turn on a tight lock does it have any sort of binding feel to it

I think it has hydraulic controlled sports diff, they do suffer from high pressure sensor faults, electric and software problems on different Audi models.

Considering you have droning noise it could be wheel bearing worn letting the hub to move around a bit and affecting ABS sensor readings and that confuses diff control. But I would expect it to bring up ESP and/or ABS lights as well. Check the wheel bearings, log ABS sensor readings while driving and check the fault codes.

Hi all,

Thanks again for the replies. Quick update:
The droning noise was a wheel bearing, replaced and noise issue is solved. Cost approx £300 at the local indi for reference.

Did not fix the sports diff light though, coincidental. That turned out to be 2 sensors (temp and oil level) and 2 of the clutch / fluid valves controlling the hydraulics in the sports diff. That was sorted out at the dealer - shade over £800 (ouch).

Master tech confirmed that the main cause of the light coming on is electronics / generally sensor problems. From the research I did this seems to be fairly common across sports diff on A4s.

Cheers

Glad it's sorted.

But one thing worth remembering here the "master tech" confirmed it is the electronics making the light come on but also couldn't find anything wrong with it to start with. I'm not an electrician or a "master" tech even i know it electrics that make a light work.