I have a 97 Legacy Outback Wagon 2.5 with 172k on it. Hind sight tells me I probably was having head gasket problems a year ago last summer, but now it's a full-blown problem I need to address. Please reply with comments or suggestions to what I think are possible options.
Current situation: Oily soot in coolant overflow tank. Overfills to over flow tank when I top off the radiator. If I let the radiator get too low, the temp gauge will start to climb and overheat at stoplights until I top of the radiator. Usually takes 1-2 weeks after topping off before this happens. Oil smells like fuel/exhaust after a fresh oil change. Also my tranny is acting weird when it shifts sometimes, and sometimes clunks into reverse. Probably needs to be replaced/rebuilt too while the motor is out.
Option 1: Used Japanese (JDM) engine with about 50k on it - $875. Used Japanese tranny $400. $200 to ship both. $1475 for both plus misc. parts to replace both myself in my garage. Down time: 2-3 days.
Option 2: Take motor out and have heads leveled and rebuilt at a machine shop. Buy the latest and greatest head gaskets from Subaru. Replace the tranny for $400 plus shipping. Total cost: $1100-1200?
Option 3: Sell the car as-is before it craps out all the way and buy something else to replace it. (I really like the car other than this issue)... it could get better gas mileage, but sure beats FWD cars in the snow! I might get $1500-2000 for it as it sits with the known problem. It's a Limited with leather...etc.
Any thoughts on these, or any other options would be greatly appreciated! Fortunately, I can do the work myself (other than machine shop work), so that will save me $.
Thanks!