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Head gaskets or junkyard engine?

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Head gaskets or junkyard engine? This may seem like a silly question, but here's the rationale behind it: I recently picked up a 91 Loyale with water in the oil (thanks, by the way, to everyone who recommended flushing out the old stuff). I haven't yet pulled the heads, but I'm certain that either there is a head gasket failure, or worse cracked head(s). I don't know the overall condition of the engine since I don't know what caused the failure, how long ago it happened, how badly overheated it may have gotten, how long the vehicle has sat with water in the crankcase (maybe as much as 6 months), etc. Assuming everything is okay on the bottom end, I will at the very least probably need to get the heads milled, or replace one or both if cracking is a problem. So, with a head gasket kit and machine work, I'm looking at at least $200 and maybe considerably more. On the upside, the engine was pulled and completely resealed and got new timing belts, tensioners, water pump, et. al. less than 30,000 miles ago (I have the service records). So, here's my dilemma: go ahead with the work on my existing engine and hope that the bottom end is okay, or buy a 1988 engine (unknown mileage) from my local wrecking yard for $250 with limited warranty, swap on good components (like water pump and timing belt stuff) from my existing engine, drop it in and go (keeping my existing engine for possible future rebuild)? I'm not sure which way to jump. Thanks for your thoughts.

I would drain the oil pan and the radiator, add new oil, then do a compression test. If it looks good, just change the intake manifold gaskets - just use oem subaru intake gaskets.

 

Another easy fix possibility is that the heads are not torqued down properly.

I would drain the oil pan and the radiator, add new oil, then do a compression test. If it looks good, just change the intake manifold gaskets - just use oem subaru intake gaskets.

 

Another easy fix possibility is that the heads are not torqued down properly.

Its not going to be intake mani gaskets if there's water in the oil.

And if the heads aren't torqued down properly, then the damage to the head gaskets are already done and need to be replaced anyways.

Intake manifold gaskets: It's not a direct path for getting coolant into the oil, but you don't need much water in the oil to make a milkshake.

 

http://www.ultimatesubaru.org/forum/showthread.php?t=51447

 

Head gaskets: Depends on how long it was run with the problem.

 

 

Its not going to be intake mani gaskets if there's water in the oil.

And if the heads aren't torqued down properly, then the damage to the head gaskets are already done and need to be replaced anyways.

Intake manifold gaskets: It's not a direct path for getting coolant into the oil, but you don't need much water in the oil to make a milkshake.

I guess I don't see how you could get coolant in the oil with bad intake gaskets. You'd have to have some majorly worn rings to get enough coolant to slip by that it'd show in your oil. When the engine gets warm, even the slightest amount of water in the oil usually evaporates off.

 

Perhaps I am wrong though? It just doesn't make sense to me.

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