scoobydube

This photo appears to be for an 87 model year. It does not appear to be a Subaru service manual.

The distributor that you have in your photos, appears to be for an 85-86 turbo GL10 because it has 4 pins to attach the wires. It should say 22100AA221 on the body of the distributor. In my experience, all distributor extraction and reinstalling, should be done with the flywheel tick mark indicator, centered on the middle of the three ticks on the flywheel. The photo of your distributor does not appear to have the flywheel set in that position so it is not easy to compare the rotor position with anything else. However, with the 12 o'clock position being towards the rear of the car, you can see on your distributor, the top of a screw at the 5 o'clock position. If you car is a turbo, then the rotor should point almost exactly toward the 5 o'clock screw head, when the the distributor is installed AND with the distributor base screws that ultimately adjust the timing, centered in the wear marks at the base attachment of the distributor. Which the base screws appear to be set in the wear marks in your photo. I have used 86 XT turbo distributors in my GL10. It is exactly the same as in the GL10 turbo wagon.

Timing is usually set with the RPM around 700. Like others have said, that is not an 86 distributor. 86 distributors may only last 50,000 miles. They don't make them anymore. With the timing tick indicator pointing at the center tick mark of the 3 tick mark grouping on the flywheel, the turbo disty rotor should point to about the 5 o'clock position, and be almost directly on top of the screw in the distributor, with the screws that hold the distributor to the engine in the center of their wear marks, if it was an 86 turbo XT. The firing order may be wrong. 1-3-2-4 Front right is #1, Rear right is #3, Front left is #2, Rear left is #4. 86 specs are 6 degrees at 700 rpm for MPFI non-turbo MT. For a turbo, it is 25 degrees BTDC at 700 rpm.

Removed the front wheels one at a time, and check the tightness of the bolts that hold the disc brake disc on. If that doesn't help then jack up both sides of the front of the car so both front wheels are off the ground and the rear wheels are tightly blocked in place. With the tranny in 2WD, then engage the front wheels in whatever gear you have been hearing the problem. Then have someone else listen for where your sound is coming from. Or you could have someone else sit in the drivers seat and be ready to apply brakes or to give is some gas to try and pinpoint the issue.

I had a backfire of sorts once and the timing belt slipped a tooth. And the engine then did not run well.

Bad things: Installed Autozone front CV axles on my 4wd 86 GL10 with 465,000 miles. Autozone sells you cheap Made in China CV joints without telling you. O'Reilly sells a much higher grade and they are still purring. The other thing was I bought hydraulic lifters from Rock Auto and half of them were already shot. They hand picked the damaged NOS lifters and sent me them. Which I thought was real considerate of them, and wasted a lot of my time. Good things: On my GL10 exhaust manifold, I removed the heat shield between the passenger side exhaust port and the turbo flange. This enabled me to get rid of the standard exhaust death rattle, and it allowed me to have the standard crack at the turbo flange, welded all around on both the outside and inside. So it won't crack again. Killed two birds with one stone. Subaru does not make gl10 exhaust manifolds anymore so save your old cracked rattlely ones and repair them.

Most GL10's have a turbo, which you did not mention in your post. You may have blown out a hole in the exhaust manifold, or caused a crack someplace that then reduces the velocity of the exhaust gases pushing on the turbo fan blades. Which may then put the turbo mostly out of commission. GL10 engines don't work well with a turbo that is not fully operational. You might be able to look at the dash and read the indicator of when the turbo supposedly adds power, and notice that it does not indicate that it is adding power.

Since you probably have the engine out of the car, I would also replace the water pump, all timing belt idlers and timing belts. Because they are a pain to change them out once the engine is back in the car.

I removed the glove compartment, and the cover below it. The dash was left entirely in place.

I have an 86 and I had no problem in removing the heater core without touching the dash.

You pull the entire heater core with plastic cover, from beneath the dash and leave the dash entirely in place. It is only held in place with one or two bolts. Obviously, you have to disconnect it on the other side of the fire wall.