Just a follow-up from my visit to the dealership regarding this issue. It was in fact the emergency brake locking up. After it has been engaged, it doesn't fully disengage when hand brake is released. This is mainly caused by rust and wear on variour parts of emergency brake assembly due to age and limited use. The dealership suggested getting the whole assembly replaced for $250 parts and $600 labor. Of course, I said hell no. The cost incurred was a diagnostic fee of $159. Still too much for merely disengaging e-brake, but worth not having to live with the noise.
Steve