Three problems related to engine head gasket failure have been reported for the 1998 Subaru Outback. The most recently reported issues are listed below.
Head gasket failure in Subaru legacy Outback 1998. Engine overheated which lead to lead to smoke coming out under the hood and subsequent warping of engine heads. I hard to replace gasket heads but I am told there is no guarantee this would not happen again since there is an apparent design flaw in the 2. 5l engines.
Head gasket on my '98 Outback failed. Dealer said not uncommon. He has 3 more waiting for head gaskets. Seems a number of head gasket failures on the Subaru discussion group on edmunds. Com townhall. Fortunately, mine was discovered with no engine damage. The cost of repair was $2500. 00. Quite a financial drain for me. Some talk on discussion group wondering if a design problem with the 2. 5 liter engine. Subaru emailed me that there is no problem with head gaskets and that all mechanical things fail with time, some sooner and some later. On the Subaru discussion group, a number of the head gaskets were at low mileage. Mine was at 94,000 miles.
The headgasket burned through. Replaced headgasket, had heads milled. Now exactly 1 1/2 years later in April 2003 the car is overheating, everyone says the car should not be doing that, but it is. It is alot of money for a car that is only 5 yrs. Old and having major engine problems.