Loss of power and very loud internal engine noise on 2004 Legacy GT sedan

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Hello everyone I am new to this forum. A while ago my brother experienced a problem with his 2004 Legacy GT sedan. It is factory stock with the 2.5 liter SOHC non turbo engine mated to the "SportShift" four speed automatic transmission. Tooling down the highway at about 60 mph the car suddenly lost power as it developed a relatively loud, say engine knock. He immediately turned off to a side road and shut the engine down. He tried to restart the engine minutes after that and several times later, but it would not fire. He towed it home and then when he tried to start the car again it did fire and run. The car continues to be able to start but of course still has low power and he does not want to move it any distance. The noise is a very loud ticking almost like valve clatter. The exact place that the noise is coming from is not known. Connecting rod, connecting rod bearings, transmission area, we don't know. The harmonic balancer does appear good. There is no smoke coming out from the exhaust although a very slight whitish color upon initial start up. All of this is happening without the oil light or check engine light coming on. The vehicle has 181,500 miles.

We are going to get the problem diagnosed at a repair shop this week but I figured to run this through you folks first to maybe come up with some ideas. The better educated and informed I am before going to an auto facility is a good thing. Are there any common issues with this type of Subaru engine as described above? This year 2.5 liter (EJ25) is an interference engine, I gathered, so if this was a"major" problem the engine would not run. Maybe the cam slipped all so slightly and caused a timing issue. I don't know. Any help is appreciated and thank you in advance.

Sorry, I put this mistakenly in the Impreza section and decided to go forward anyways as I was more than half way complete.
 
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The car does need a new engine and used ones, even without any warranty, are expensive. For example, $1400 for one with 157,000 miles on it is what I am seeing and that is without the cost of labor to remove the current engine and install another. That is a lot money to stick into a car this old. Yes, it would be worth it, (marginally), if a guy could get 150,000 to 200,000 more miles of relatively trouble free, good service out of the car. But seeing all of the known problems inherent with this Subaru model and vintage, (head gaskets that commonly fail, never ending rust, a complicated and expensive to repair AWD drive train, etc.), that is even a tough sell. To sum it all up, I have got a real turd on my hands.
 

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