98 Subaru Forester has burning smell

Leaking head gasket is my guess. It could be coolant or oil.

Simple things first: Is the ps rack underneath wet or slightly bleeding ps/atf (the pink stuff)? If so, just buy a quart of fluid that contains a stop-leak additive. It may with time expand the rack's seals and stop the leak...practically for free! Is the leak at or below the (top-mounted) ps pump? If so, it's apt to be ither a similar inner seal (unlikely), but more often an old intake pipe o-ring that's shrunk. But it's easier to replace this fifty cent o-ring then to wait for an additive to expand it over several weeks: remove the upper hose coupler (one 10mm bolt), and pick out/off the old black rubber o- ring. Match it with a SLIGHTLY larger one at a hardware store, and remount, carefully retightening the hose-cap assy; top off the fluid in the reservoir, then exercise the steering end-to-end a few cycles to purge any air. But note that IF a tired ps o-ring allows sucking air into the pump it will churn a viscous pink "foam" that will not only leak out of the ps reservoir, but also interfere wildly with steering function. So if it's a "top" leak attend to it now. If a "bottom" (rack) leak try sealing over time with the boosted fluid as needed to keep topped up. Only if the stop-leak fluid doesn't quench the rack leak after a couple of months effort might you need to replace the rack. Be patient....

OTOH, if the oil smell is OIL, it's probably either from bleeding spark plug seals in the valve covers (cheap), or a leaking head gasket on the right side bleeding hot oil onto an even hotter cat conv. The only recourse for the latter is a $1.5k hg job. Your vehicle's probably too old to invest that much. Other possibility is a rear main seal leaking oil back there. Try sealing with an oil additive with stop leak over time...and use 10w40 oil winter and 20w50 oil summer to slow the leak if you don't want to spend $500 pulling the motor to replace the big rear seal.

So I found the problem. I used stop leak on the power steering and the resevoir is full after a few days of doing it. It's whatever is leaking through the bottom. I took pictures... I don't know if its radiator fluid or oil. Would I be able to use liquid stopped to get those from leaking as well? The shame is, for $1000, this 98 Subaru with 198k on it drives awesome... Except for the leak and the smell. I don't know anything about mechanicals of vehicles. And obviously since I bought a $1k Subaru, I'm short of cash... What can I do? I posted pictures.

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I guess that I'm frustrated because the guy who sold it to us told me that it was a power steering leak. I was in car sales with Ford for a long time, so I know the BS... But you just want to believe people so badly. It's part of humanity.

Nice easy catch on the ps fluid.... The rear oily mess is another story. LOOKS like oil, but verify that it's not just green coolant leaking from the driver's side head gasket. It's dripping on the ground, so if it's coolant you ARE looking at a mandatory $1.5k head gasket replacement, as no additive nor quick fix will work...trust me. However, the bleed has spread sideways a lot, leading me to think you might just have a rear main seal leak...although a pretty bad one. Just check the effluent. If it's oil, then try a couple of bottles of OIL LEAK seal conditioner and switch to 20w50 dino oil and see if it abates considerably over time. If it does NOT, then pull the motor/trans apart and replace the main seal ($500-600). If you're having trouble determining if the leak is oil or coolant (or both!), then get this chariot on a tall lift and simply reinspect from directly underneath; you'll see a coolant leak either at the lower rear corner (#4 cyl) of the head gasket, and/or an oil leak from the rear motor-transmission juncture. Note that if you have to replace the head gaskets the motor comes out anyway, at which time replacing the rear main seal is just a few more minutes work. That's another reason to try to slow a rear main seal leak chemically and with thicker oil, as eventually you'll need new head gaskets, where replacing a slightly leaking rear seal is essentially a freebie add-on. So: oil or coolant?

Oops! Forgot this is an old 2.5i DOHC, where replacing head gaskets and expecting much ongoing life is NOT a reasonable bet. But leaky rear main seals were pretty common. So I suspect you've an oily rear main seal crack, perhaps at the plastic baffle plate Subaru used before replacing with a metal one! So drop the motor and replace the baffle and seal if you cannot quench it with sealer and thicker motor oil. If your motor is NOT ever overheating then I suspect your old HGs are fine. So get that 0w or 10w oil out of there and try 20w50 and a bottle of seal conditioner and see if the wet diaper abates in a few weeks.