It's quite possible that someone installed the axle 180* out on the tranny end. The hole for the pin doesn't quite line up, it's about 1/2 off. One can "force" the pin thru though. Makes removing the pin a real pain.

 

If that is the case, you'll need to drive the pin out from the opposite side from where the broken drill bit is, as the bit will cause the pin to jam in the shaft at the mis-alignment, which sounds like it's doing now.

 

If you remove the starter, you can reach the pin from the top. Use the 3/16" punch as mentioned. I have a 12" 3/8" drive extension that I use for doing the axle pins. Fits over the drift punch nicely. My Brother was kind enough to previously mangle the extension for me, so this is it's only usable function anymore.

So I should get a craftsman 3/16 drift punch and possibly a 12" extension, remove the starter and pound the pin the opposite way the drill bit went in. Will these tools be at napa or more likely sears or a place like that.

Mac tool number for Subaru Axle pin Removal tool... LT-730