I have a 97 outback im replacing the trany and was told that only a 97 would fit is this true it is an auto with a 2.5 engine.

I believe 96-mid-99 will fit. In late '99 they changed over wth the 2.5 SOHC.

all the transmissions from 96-99 (98 for forester) are interchangeable - the only functional differences are in the final drive ratios. Final drive ratios that should match your 97 OBW are:

 

96-99 OBW, 96-98 Forester, 96-99 Legacy GT & LSi should all work.

 

(my guess is later models work too, but they're likely more expensive and i'm not sure).

 

one reason the 98's are not listed as an interchanging transmission are because they incorporate an external screw on transmission filter that that 96 and 97's don't have. but it doesn't matter since 97 and 98 OBW transmissions are identical in every other way, so it doesn't affect your swap - just install a new trans filter before you install any 98+ trans.

 

also the bell housing changes slightly in 98 - but it's all bolt up and plug and play, not a big deal and doesn't require any additional work or anything.

very very few 99 OBW trans will fit. the wiring harness changed when the went with the phase 2 engine in 99. you need a trans whose code number starts with TZ102Z2....... if the new trans has this 7 digit code (plus a few other digits that don't matter) it will fit.