After I had the engine out, a few things became immediately apparent. 1) The turbo was completely dead. 2) The exhaust was rotted beyond saving. 3) A lot of the fasteners were corroded terribly to various aluminum parts and would be a pain to remove.
My first heroic battle with this car was removing the turbo. All three nuts holding it on were difficult to access, completely corroded, and rounded off. After 2 hours of trying heat, a BFH and a chisel, a cutoff wheel, and other increasing ineffective methods, I gave up and bought these:
I now call them my Michigan sockets. Removal took all of 10 minutes...I know, I know...right tools for the job and all that.
I researched the cost and difficulty of rebuilding the turbo. There was a massive amount of axial play of the turbo shaft, but the walls of the compressor housing still looked clean. However, this turbo had suffered the famous turbine housing crack. Many IHI VF39 and VF43 develop this crack from the wastegate port and it supposedly doesn't affect operation, but it still bothered me. It looked exactly like this: (not my photo)
I hopped on Ebay and was lucky enough to find an extremely low mileage VF43 for only $300 shipped.
Here it is installed (jumping to the future!)
And here is the turbine housing. Note the "lack of crack"
I then removed (or rather hammered until it disintegrated) the exhaust manifolds, motor mounts, oil cooler, some coolant pipes, and then the oil pan. And then I found a huge problem.
Try to ignore the copious amounts of bearing material in the oil. It's difficult to see from this angle, but the base of the oil pickup tube was cracked wide open. Apparently, this is a well known problem with Subarus of this vintage. Vibration over time fatigues that joint and it develops a crack resulting in an obvious loss of oil pressure. Hello spun bearings! What's more is that I don't think Subaru ever really addressed the problem as the OEM replacement tube looks identical. Ugh. I hate when engineers (actually vehicle program finance managers) cheap out.