Surface mount is the only option. Here is the product.

http://www.reliancecontrols.com/ProductDetail.aspx?TRB1203C

This panel allows either the 125 amp to be on or the 30 amp from the gen to be on, but not both at the same time. There are feed thru lugs to feed the existing sub panel. I would manage the load via the watt meters on this panel and turn off most of the breakers in the sub that I don't plan on using. The only reason I mentioned changing the breaker in the main from 125 to 100 was because so far, I think that's the biggest nm wire I could find(rated for 95 amps I believe) I was just asking from the point of what was physically going to be the easiest way to get the wires from the knockout inside the wall in the top of the existing panel to the back of this surface mount panel. Thanks for all the advice.

Did you bother to read the instructions?

They told you exactly how to do it. You use (depending on which version you purchased) either a large (2") nipple between the panels or the provided conduit. You must do it this way. You can NOT use ROMEX.

OK, now I think I'm beginning to understand what you are trying to do. Are you thinking that you are moving the entire subpanel onto the switched side?

You don't need to be messing with the subpanel "main breaker". It's presence is entirely spurious. The two breakers of concern are the breaker the feeds the existing sub panel (which can not be larger than the ampacity of any of the wiring from the feeder path through into your transfer panel) and the breaker you install in the transfer panel to feed the sub panel, which can not be bigger than the ampacity of the wiring used to make that connection.

In addition, you're going to have to find some listed way of making the connection between the existing subpanel feeder wires and whatever you're connecting the utility side of the transfer panel with. These will have to be removed from the subpanel lugs.

I still fail to see why recessed mounting isn't an option and frankly to do what you're trying to do, there seems to be no way other than cutting into the wall anyhow. You must get a hunk of conduit between these two panels.

Thanks again Ron for the reply. The only reason I thought of downsizing the existing breaker was so that I could use #2-3 cu nm between the panels. The plan was this. Pull the se al wire feeding the sub panel out and go into the 125 amp breaker on the transfer panel. The 30 amp on the transfer panel will be connected to a remotely located 30 amp inlet box via #10/3. From the feed thru lugs on the buses in the transfer panel I was going to use 1/0 al se cable to feed the main lugs on the existing sub panel. I could recess the box and use a nipple between the two but the front trim on the new transfer panel is not flared out for use in a flush mount and I thought that would look bad. I guess I could see if I could order a new front from Siemens I believe it is. Does either of these sound ok? Again, thanks for your time.

Since it appears you're using a portable generator under 10kw, have you considered something like this other style transfer switch?

http://www.reliancecontrols.com/ProductDetail.aspx?31406CRK -- or -- http://www.reliancecontrols.com/ProductDetail.aspx?31410CRK

The wiring interrupts the individual circuits and is just 12awg or 10awg as required.

NO, NO, NO, NO. You need to read the part about having an electrician install it. The whole installation sounds illegal. What sort of closet is this again?

The subpanel breaker is IMMATERIAL to any wire sizing. What are you going to do to connect the UTILITY (i.e., the subpanel feeder) to the transfer switch?

Instead I am going to convert main-lug sub panel to a main breaker and install an interlock kit between the backfeed breaker from the gen and the new main breaker. In addition I will use watt meters from reliance to monitor the load of the breakers in the sub panel that I leave on under gen load.

You've lost me. So you're using the transfer panel for nothing other than the watt meters? I.e., you're not using it's interlock? What's the point?

You can buy wattmeters for a lot less money and a lot less grief than you're talking here.

In consideration of your posts I took your advice and called an electrician. He is supposed to come today to look and possibly install the transfer panel. I'll let you know what he says. Thanks again for your time and advice.

Electrician just got done. Wire that originally fed sub panel comes in on bottom right and connects to 125 2-pole. #10 Wire from Inlet box from gen hooks to 2 pole 30. Wire from top of buses goes out top of box into sub panel. Hope this looks right. It cost me $500 for install. Please advise if you see any problems. Thanks again.

So, the generator inlet is the top right? and the generator plugs into something somewhere else that is fed to this location? Where is the subpanel in relation to this?

This is the inlet that is located on the back porch. It comes into the transfer panel on the top right and is connected to the 2 pole 30. The sub panel that the transfer panel feeds is pictured in the bottom of the first picture. That was existing and can now be powered by the generator through the transfer panel.

This is a close up of the transfer panel.

Good, you did do what I suspected you were trying to do is to just use the transfer panel as a switch (it's sort of overkill for that). Looks like you were lucky in that there was enough slack in the subpanel feeder to get it up into the transfer panel.

does this look good to you? I am not sure how else I could have accomplished this. I could have used a smaller 6 circuit or 10 circuit pre-wired panel but it was going to be about the same money. I guess the installation would've been easier?

What you have is fine, it's just sort of overkill buying a "panel" when you didn't use any of the slots in it, just the transfer switch.

I think it is fine, but I will make two observations:

A. I would have used a larger gauge between the outlet and the transfer switch. If I got a larger generator later the required wiring would already be in place. That looks small for #10.

B. I'm not sure that Reliance outlet is rated for outdoor use with a plug installed. The Generac one puts the plug and cover on the bottom so that water can't get in while it is being used.