Anyone has a clue about this strange problem i have::
With the engine switched off, but the ignition on,,when i release the hand-brake,,the lamp in the dashboard dims,,but does not extinguish completely. Then when i turn on the engine,,it goes out completely. I am sure that it wasn't working this way before...i was thinking about a bad earth....what do you think??

Some models are set so that BRAKE light will come on when your brake pads are wearing thin, and therefore your brake fluid reservior is low. It's a warning for you to check (and replace if needed) your brake pads.

My 2000 Impreza did this fairly recently. I don't know if your 1996 is set up to work the same way. Check your brakes, just to be safe.

I agree with Jay, check your pads, also check your brake fluid level in case you have a leaking brake line.

i've checked the fluid its full, and the front brake pads are almost new. Should i check the rear drum shoes?

What does it do when you apply/release the hand brake with the engine running?

After replacing the shoes, did you bleed the lines?

Applying/releasing the handbrake with the engine running, the dashboard light works normally. It is with the engine turned off, that the lamp stays dimly lit when releasing the handbrake. I have tried disconnecting the wires that go to the fluid reservoir but the lamps stays half lit just the same. No i didnt bleed the system as the brakes seem to be working normally...........

Here's a long shot: Do you have a brake light burnt out?