Two problems related to radiator have been reported for the 1998 Subaru Legacy. The most recently reported issues are listed below.
My 98 Subaru Legacy outback 2. 5 liter, 144k miles was sporadically overheating while driving on the highway through a snow/rain storm. The temperature gauge would go up, and the cabin heater would start producing cool air. I pulled over and let it cool down, filled the radiator back up with water (it had overflowed) and drove slowly home. When I took it to the mechanic, he suggested when hearing the symptoms that it was a blown head gasket, and that this Subaru engine was notorious for this. He even suggested a class action suit. After he checked it out, it was indeed a blown head gasket. After some web research on car forums, I found several other people with exactly the same problem with this particular engine.
Consumer noticed that the temperature gauge was registering hot on the dashboard while driving. Consumer was able to maintain control of the vehicle, and drove it to the dealer. Mechanic determined that the head gasket blew out and needed replacement. . . . . . . It was necessary to tear down the engine and replace all the gaskets/hoses/radiator/water pump/thermostat, as well as the coolant and oil. From January 2004 to September 2004, Subaru replaced 13 head gaskets on outbacks, and vintages from 1996-1998, and a mileage from 60,000 miles-90,000 miles. This represented a serious manufacting defect, it should be addressed by the manufacturer with a recall notice.