One problem related to axle shaft seal has been reported for the 1998 Subaru Legacy. The most recently reported issues are listed below.
Dealership service technician indicated the rear axle was coming loose from the rear differential, recommended replacement. Dealership replaced rear axle seals. Dealership indicated problem was caused by vehicle being suspended by differential and resulting downward strain on axles. This has not occured while we have owned this car (approx. 3 years). The front axle seals were replaced in a recall on 7/18/03.