12/2 wire to power a 40 amp breaker? Not acceptable. 12/2 when, as
Doug said, four wires are required? 12/2 is not four wires and not
sufficient gauge.

wrote:
Thanks everyone, especially Doug for this post which spells it out
clearly. Please comment on this proposed "fix":
I run another wire back to the main panel (I'll probably use some 12/2
with ground) and attach all three conductors to the ground bar in the
main panel. Then, at the sub panel, I will connect all grounds to the
new cable but not to the neutral bus bar. Now all grounds will be
grounded back at the main panel, and the neutral in the sub will be
isolated from the grounds and from the sub panel chassis. (as long as I
remove the grounding screw from the neutral bus bar)
Thanks again for your responses.
Joe