Hmm.... Okay. If doing a timing belt scares you, I would not attempt it. I believe your motor is an interference motor (I know for sure 97-98 EJ22 motors are, and that means if you mess up you can damage internals), but I can't be sure because your 99 is a Phase 2 motor. Phase 2 started sometime in 98 I believe, so you need to make sure that the motor this guy has is compatible with yours. If it is, I suggest going that route. Your engine needs major maintenance, and if since you are not going to do that yourself, it will cost you a lot of money. It would cost you more than what this guy is offering you for those parts and a motor and a head gasket job. Just make sure that he uses ONLY OEM Subaru head gaskets, and nothing else.

From the sounds in the video, I would say you have a rod bearing knock. It can't be a collapsed lifter because your car does not have hydraulic lifters, as you have manually adjustable screws / lock nuts for valve adjustment. When you hear that noise, it's only a matter of time until it completely goes and you throw a rod. It may last while, but there is no telling. How low did you run the motor on oil? How many miles ago was that?

If this guy has a motor that is compatible with yours, I say go for it. It's a steal of a deal. And as long as you take very good care of the car and the new motor, it'll last you forever.