Well, after searching this forum for a bit, it looks like my 1999 Legacy Outback has the dreaded front crank seal failure. I started to smell burning oil literally a month after the powertrain warranty had expired. Now my vehicle has 66k miles on it and is smoking after freeway drives. I guess I'll be heading to the dealer to have the seal replaced as well as the timing belts.
Quite frankly, this is distressing. I feel that seal/gasket failures on such a low mileage engine are unacceptable and should be handled by a recall or similiar. This is something that you usually read about happening to a Ford like the head gasket controversy. To make things worse, after researching this on the net it seems like this can be a chronic problem and not a one time fix. I bought this car hoping to "drive it into the ground". In other words, I'd maintain it and it would last me well over 150k miles and 10 years. Now I'm having serious doubts about this car and it's future.
If anyone else has had experience with this problem, please, let me know.