One problem related to manifold/header/muffler/tail pipe has been reported for the 1997 Subaru Legacy. The most recently reported issues are listed below.
Problems with vehicle blowing head gaskets. While driving, the check engine light illuminated, smoke came from under the hood and the tail pipe. Vehicle was towed to a Subaru dealership where it was discovered the problem was a blown head gasket. Coolant and oil sprayed all over the engine and ignited a small fire on the exhaust manifold, but it extinguished itself. Consumer had vehicle towed to her local dealer. She obtained two opinions and they both said the same thing. Extreme coolant loss but no evidence of a leak. It appeared without taking the engine apart to be a factory defect. It's either a defective head gasket, casting flaw in the metal or a head that wasn't torqued properly. Consumer would like Subaru to cover the entire cost a of a engine (including labor), reimbursement for air flow and filter replacement, reimbursement for towing, cost of a rental car, and mechanic's vehicle check for a total of $1976. 16 dollars.