I have researched and been unable to find out what actually takes place when the car enters the "failsafe" & "restricted performance" modes. All my search results seem to turn up the causes and cures, but not the actual restrictions that are put in motion when these modes occur. My XK8 went into "failsafe" once and I disconnected the battery ground cable to clear the code. In the process I found the positive cable was loose and tightened it. The code hasn't reappeared, but if it does I want to know what the actual driving restrictions are. Does anyone know what the restrictions are for each mode?

 

All of the failure modes and definitions are documented in these tables: (There is some variation between model years, this is for a 2003. See section 303-04 of JTIS for your specific model year).