I am planning to add a Reliance 31406 CRK transfer switch using a bonded neutral generator. I can undo the generator bonding if needed. I have a main panel and a sub panel. One of the switches I want to transfer is on the sub panel and one of the switches is on the main panel. I am stuck on where to connect the neutral and ground wires coming out of the transfer switch. I have easy access to the sub panel and can connect there (as shown in the attacked drawing) but don't know if that is appropriate.
Nope. This question comes up a lot on here, and you can't do it because it creates a paralleling problem with the neutrals.
These Reliance switches are designed for one thing: to provide a generator salesman a switch to offer to anyone without having to understand or investigate their panel. But they aren't well made, and they have a lot of limitations -- GFCI/AFCI support is a serious problem. And because of how they mishandle neutrals, supporting 2 separate panels is simply out of the question.
Your only Reliance-side option is to move the circuit in question so it's in the same panel with all the other circuits.
The better way to do it is to do what the generator salesman was trying to avoid: Evaluate your main panel for the feasibility of fitting a Generator Interlock. That lets you feed the entire main service panel (and subpanel too!) from the generator; on the proviso that you limit appliance use (or turn some off) to keep current draw within the generator's range. That will neatly moot your entire problem.