Two problems related to engine exhaust system have been reported for the 1996 Subaru Legacy. The most recently reported issues are listed below.
Subaru 1996 engine defect in which exhaust valve guides prematurely fail around 70-90000 miles, falling into the engine area and causing misfiring and other engine damage.
Front crank seal is leaking oil onto exhaust system. The seal that separates the block from the oil pump has failed several times, each time, a cloud of smoke rises from the exhaust as the oil is sprayed back onto it, on one occasion the seal completely dumped several quarts of oil onto the ground.