There is a brown sludge under my radiator cap and inside, what could this be from? I flushed the radiator recently and it is back? I have an Impreza MY97 WRX.

 

Sorry mate, but it does normally point to head gasket failure.

In this case, it looks like one of the gaskets has failed between an oil and water gallery, hence now oil getting into the coolant system, causing this emulsified brown sludge.

 

Thanks for the diagnostic. It completely makes sense. I also notice that check engine light shows the coolant sensor (error 21) is faulty. Its gonna be one expensive labour bill!

 

Well, the head gasket job at API (Subaru engine gurus) is £700 + VAT - which is very much in the ballpark. This is, of course, assuming that it is just the gaskets need replacing and nothing else needs to be attended to (aside from a clean-up of the heads/block mating surfaces).

The good thing is, £100 or so of the bill is for uprated metal MLS head gaskets. API use STi ones - which are fine for most applications... So at least you're getting 'something better' out of it. .