Four problems related to engine have been reported for the 1998 Subaru Legacy. The most recently reported issues are listed below.
At the beginning of February, 2003, blown engine in a 1998 Subaru Legacy 2. 5 gt. Dealer stated that the problem was due to cold weather in the northeast, and that there were 4 other Subaru's with blown engines in his lot awaiting repair. I had the engine replaced with a 1999 Subaru at a trusted mechanic's (at a cost of $4000), and today the alternator on this 1999 engine died ( this had been a recall on the '98 Subaru's).
Dealer wrote: "noise from valve train. . . Advised owner these are solid lifters and are noisy when cold, also characteristic of this engine is 'cam walk' which also will be noisy for a few minutes when cold then goes away. " that wa at 48. 5 k miles, now at 53000 miles, noise is much louder when cold, and still perceptable when warm. Bought car used form dealer--resale value is now much lower due to noise. Their explanation is nonsensical. Obviously dubaru does not want to deal with this issue--I wrote to Subaru USA and they refered me back to dealer.
Loud engine knocking at start-up/Subaru has "internal" service bulletin to replace pistons?.
Grease seals on drive shaft failed. Yh.