2005 Subaru Legacy GT Wagon Engine Locked Up?

[SilentHurricane]

Recently, I purchased a 2005 Subaru Legacy GT Wagon. 2.5L Turbo engine (EJ255?) with the 5EAT trans. Previous owner had replaced the stock turbo with a VF46 and had a custom intake fitted. I started using it as my daily driver and one day on my way to work I was doing about 80 down the highway when suddenly I was getting no power from the gas. The car began downshifting on its own and slowing down. I pulled over to the side of the road and tried to start it. It would start, run for maybe 2-5 seconds (very roughly) and then die. I read the codes and there were two. A P0700 (trans control) and a P0725 (Engine Speed Sensor). Got it towed back to my home and replaced the crankshaft position sensor (which is one of the recommended fixes for a P0725) and then tried to start it but it wouldn't start at all. It sounded like the starter didn't have enough torque to move the engine. I tried jumping it and that didn't help. I tried manually moving the crank with a breaker bar but the engine would not budge. I took it to a dealership to have them try and see what was wrong with it and they didn't tell me anything that I didn't already know. They told me "The engines locked up" and they wanted at least 1500 just to take it apart and diagnose it. At this point the car is sitting in my garage waiting for me to do something with it so I am open to suggestions at this point as to what the issue could be.

[MannyMohawk#5]

Do you have the mechanical ability/tools to pull the engine yourself? You could pull it, tear it down and look at the internals. If it's screwed, you could have it rebuilt and save a ton on labor as far as installation...?

[rkrenicki]

He has been updating the story on the facebook group. Basically, his turbo was oil starved and ate itself sending thousands of metal shards into the engine.

[SilentHurricane]

Alright, here's an update. Yesterday I finally got some time to work on the car and a friend came over to help me out. First and foremost. When I started working on the car (after moving it off the Uhaul and around my Garage a bit) I decided to check and see if the engine was still locked up. To my surprise it moved. It wasn't exceedingly easy to move but I put a breaker bar on the end of a socket and it moved smoothly. So, not sure why the hell that happened but it did. I proceeded with the disassembly. I went after the Turbo first. When I got the Turbo off... Well... That's completely screwed. The Exhaust turbine has completely broken off the shaft and the oil feed line is freaking dry.
I don't know how well links work on this forum but here is the Turbo carnage:
After the Turbo I drained the coolant and the oil. The coolant came out perfectly clean. The oil came out very dark and I did my best to drain it out in a way that would let me inspect it but I'm not sure how well I did. I emptied it into a large clear plastic container and the oil in that looked dirty, but not sparkly. There were small bits of dirt and stuff that I honestly couldn't identify but could have come from the bottom of the car when I was draining it. The oil filter was a bit different. The oil coming out of the filter did look a bit sparkly. I used what I had (paper shop towels) to kind of absorb the oil itself and leave the residue behind. It didn't look great. My friend who was helping me is involved with a lemons racing team and he says that the oil that was coming out of the filter looks like the oil that they drain out of their Dodge Neon racecar. So, yeah. Not good.
Again, not sure if links will work but, here are those pics: http://imgur.com/gallery/OHm3p
From here I am going to further disassemble the engine, pull the oil pan, borescope the cylinders, etc. and see if anyone will let me barrow their hoist for a bit because I would rather not have to buy one. More updates to come.