One, you are looking at the incorrect sensor data. You need to look at the AF sensor Lambda data. That is what the ECM uses to determine rich or lean conditions.
Two, the sensor is reporting too lean, so looking at the Lambda data will give you an indication based on the voltage output of the sensor. If you are unsure of the sensor function, you can force a rich condition simply by spraying in an accelerant into the intake while its running and watch for the voltage to drop. If you used a "universal" sensor, that may be the issue.
Three, things that make an engine run lean and cause a P0174 or a P0420 are fuel delivery, vacuum leaks or incorrect AF, MAP or MAF data.
So, what you need to do is watch the correct data stream from the AF sensor and LTFT calculations. The ma values you are watching is the STFT waveform data. Check the fuel delivery. Check for vacuum leaks. and varify your air flow to be correct.
For now, ignore the P0420 and concentrate on the AF and fuel trim.
And read through here:
http://www.subaruoutback.org/forums/66-problems-maintenance/49537-p0420-diag.html