Bought a 96 lagecy outback off Craigslist. homeboy said they replaced HG,timing kit, belts and water pump at 160k did the rad shortly after. Well he didn't lie, but he didn't put the right gasket on. I'm pretty sure it was six star mls gasket nice gasket wrong engine. My question is now that the engine is out what should I replace,and how much do i trust in previous fixes. Obviously the HG (OEM only) and heads resurfaced. How far in to the engine aka rabbit hole should I go? 174k on it now.

The real question is, how many times was it overheated? The 25d block has tiny rod bearings and they don't take kindly to overheating.

 

If you're up for a project, split the block halves and pop new bearings in it. Otherwise, find another engine to drop in it. 2.2s are robust and a popular swap.

Save time and money, drop in a good used 2.2

Dang y'all went to dark place fast. the car ran great before it over heated when i say it over heated the temp went up i checked the rad overflow and the tell tale bubbles where flowing. So i went straight for the heads. I was thinking about seals and such.

You saw it get "hot" once. The question you can't really answer is: how many times did the previous owner run the thing until the needle pegged in the red?

Most of the time the way people find out the head gaskets are leaking, is when the engine overheats.

 

The engine is out, pull the timing covers off and remove the cam sprockets. Then check the rear timing covers for any signs of melting where they attach to the heads. If the covers are melted, the engine was way overheated, and will need bearings.

No melting

I bought a car with a 2.5D that had been overheated until the engine seized up... twice. It still ran, though... So I slammed 2.2 heads on it for raised compression to see how long it would last. Made it maybe 10k miles, had low oil pressure, and burned an inordinate amount of oil. It blew up hilariously and cracked the cylinder liner into multiple pieces and parts of the piston came out of the oil pan... But nothing was melted, no real signs of anything getting really hot.

You have no idea if it was treated like this before you bought it...  I bought the car knowing the engine was pooched, I just wanted to see how far I could run it... If you want a reliable car, ditch the 2.5D, especially a 96 2.5.

Iwas just looking for a parts list not a new engine I'm not rich

I had similar problem with the same concerns as above not knowing the history. I'm one for the engine swap side of this discussion. My 25d had one gasket replaced but the other still needed doing according to the previous owner. Parts, heads resurfaced etc etc was not economic with 205000 ks compared to a EJ22 swap in my case. Bought a complete sedan with 85000 Ks (and already replaced timing belt, water pump etc) for $400, swapped them myself. Extra costs - manifold and exhaust gaskets $45. Engine hoist $75 fir a day. Add oil and coolant and it was $600 ish compared to $2000 plus.

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Parts would be:

 

Head Gasket kit (OEM is around $250 online)

 

Timing Belt/Water Pump + idlers (unless you know exactly when they were last replaced) around $180 on Amazon/ebay for a Mizumo/evergreen kit with an Aisin water pump.

 

You'll want to have the heads checked for true.  

 

I would also replace the upper/lower radiator hose and the bypass hose (OEM is only a bit more than aftermarket online and fits better) about $40/$50