First, determine that you have a good foundation to make major work worth your investment, have your friend first evaluate the current state of the engine.
Do a compression test, listen very carefully for piston slap, rod knock, HLA issues, and evaluate if major internals are worn out of specification. I personally bought a mechanics stethoscope and a compression tester. Good compression and everything sounds good? Pull the timing cover and evaluate the belt. Tensioner good? Belt in good condition? No seal leaks? You may need to replace the cover and bolts on a car this age, mine are shot.
Spend some time, get the motor running as good as you can, fix all the little issues (hoses, filters, plugs, Rotella in the motor, IAC cleaned, MAFS cleaned, plug wires etc). You may very well not need to do anything. You may be able to just continue enjoying the car as is without spending big money. That sounds boring, I know. But its cheaper and the car is worth more unmolested and properly maintained.
BUT sounds like you are looking for something "more".
If you WANT a boosted car, and do not want to BECOME an ASE certified ex-Subaru technician (I leave ex- in there for a reason, these cars suck c equals 3 from a mechanics standpoint IMO) you should fix this car only in order to re-sell it to buy a WRX or other Turbo Subie.
If your heart is set on modding the LGT, there have been plenty of great suggestions.