Whew! We lucked out. Dealer said it is the front hub and bearings and will be covered under warranty. The Warranty booklet is a little confusing. It states:
Powertrain Warranty
This warranty covers repairs needed to correct defects in materials or workmanship of any component listed in the next column and supplied by Toyota, subject to the exceptions indicated under "What is Not Covered" on pages 11-12.
Coverage is for 60 months or 60,000 miles, whichever comes first.
The info listed in the "next column" is listed below:
Engine...blah blah
Transmission and Transaxle...blah blah
Front-Wheel-Drive System: Final drive housing and all internal parts, axle shafts, drive shafts, constant velocity joints, front hub and bearings, seals and gaskets.
Rear-Wheel-Drive System...blah blah
Well, the noise is really annoying...sounds like the vehicle is ready to be airborn!
Hopefully, we'll have our Highlander back to it's old self again soon. :D