After forgetting to buy the clutch bolts (the ones that hold the clutch onto the flywheel) and waiting for them to arrive, We finally assembled the clutch and attached the engine to the 5MT. It was amazing to see how much smaller the whole assy was compared to the 4EAT.
The engine hoist was still operating enough to get the MT in the car. We slowly lowered it down while putting the floor jack underneath the tail to hold it up and roll it back into place while hooking up part of the shifter. Once the engine mounts were settled into the front subframe bolted in the trans xmember to hold up the MT. I tightened all those up and reconnected most of the things on the engine. I put the radiator back in after some struggling. It seemed that the accessories like power steering pump and AC compressor were strangely close to the radiator. Even with the radiator completely attached, the AC clutch rubbed against the fan on the radiator. There was something obviously wrong, this was way off.
I crawled underneath and saw that the shifter was wedged up against the body, forcing the entire engine and trans forwards while twisting the engine mounts. I thought maybe because the shift linkage was from an 09 impreza that maybe it was a different length. I managed to free the linkage but the engine/trans did not move back into place like i was expecting. I was baffled. I could not figure it out. It was obvious that it was not sitting right. The torsion mount (that attached from the firewall to the top of the trans was not even close to lining up.
The next day we got a fresh look at it, and we realized that the Outback not only has higher springs and shocks to make it taller than the legacy, but also has spacers in the subframes that are about an inch and a quarter or 3 cm that separate it from the body. This effectively lowers the center of gravity of the car by lowering the whole drivetrain on the outbacks. The trans subframe I got was from an impreza, which bolted right up. This basically pivoted the entire engine/trans on the front subframe. the tail of the trans was up too high and it was in turn making the front of the engine too far forward. We searched for the whole day trying to find longer bolts that would fit, and spacers to secure it to the body. We found some temporary washers and put it into place.
Later on, we found out that the trans xmember is shaped differently. the front has 2 thick spacers welded to it, and the arch in the back is much shorter. We grabbed one from the junkyard and this was one of the last things we replaced before got it on its wheels. This helped to resolve the shifter being too long as well. I think it is still a little too long, but it fits in and shifts great. Now everything fits the way it should. You can see by the red markings how different the subframes are when they are next to each other. The second pic you can kinda see the thick spacer they used. Sorry for the crappy pic quality