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everyone in my area has WRX's and STI's and when i finally decided to trry out the Subaru fad, i went with a 1998 subaru outback. i was wondering if there are popular upgrades for them, i know most pepople usually go with the imprezza or the regular legacy, but i wanted to be a little bit different, im new to subarus but not new to cars at all. it has the 2.5 and is automatic, and its got a pretty bad knock even though the previous owner recently had the radiator, head gasket, water pump and timing belt done. im assuming a rod or piston went becasue of a lack of oill. so i decided while i was in there fixing all of that, id try to make it a little bit quicker. all help and ideas are welcome and a large thanks in advance, Shawn.
 

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If you've got a knock, for real, and it's not just piston slap, I would tune it with another engine. It takes a massive amount of abuse to loosen up a Subaru bottom end, and if you've really got lower end noise, don't even bother trying to fix it, just find another 2.5 to put in. Read up on compatibility, EGR, etc.

By all means, make sure that it isn't something stupid- pull the timing cover, and make sure the cam sprocket bolts are tight. A loose cam sprocket bolt sounds very much like piston slap. Ask me how I know this. Make sure the timing belt tensioner isn't acting weird. Non-Subaru water pumps are not always awesome. Pop the valve covers and check all the valve adjusters, and the cam bearing cap bolts. I'm wary because of the work recently done. People screw up and forget to tighten things. Maybe you get lucky. Probably not.

Where are you on the Cape?
 

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Since you asked about performance, there are cams that can be had for the 2.5, and I imagine you could find higher-compression pistons. I would seriously just get an EJ25T out of a Forester XT and stick it in. I have no idea what that would entail, but I imagine that someone has done it and blogged about it.
 
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