This morning I took the thermostat out and tested it in hot water and it did prove to be OK, now I rang my mate at Mt.Barker Radiators and asked a few questions. When I asked if I hadn't burped the system would a air lock cause it backup and he really never answered that question. Now one thing he did say was to cut off that little bleed dongle on the thermostat as they arent needed.
Anyway I'm on burping it now and going nice and slow and so far got just over 6 litres in so another 1.2 litres to go to ensure no air is trapped. Now I did find some crud in the coolant when I drained so I gave the block a decent wash and got a shower in the process as I used my little high pressure washer and a crude hose setup with a baffle and a fair bit of crud came out. So that does prove that mechanic told a heap of lies when he said he flushed it.
So if this does happen again I'm going to take into my mate to get to the bottom of it.
Now as there is now signs of coolant in the oil I don't think the head gasket is gone either.
Cheers Bryan
Edit:
Didn't realize just how long I spend burping the engine, I reckon it was close to an hour starting, stopping,waitin for a minute then watching bubbles. Then at last over 2 runs the level didn't drop so put the heater on flat out and let it get upto temp and no back pressure this time. Went for a drive into Littlehampton to get a slab of beers and the car ran cool so when it cools down I'll check the level and see if it has dropped. Also check out the specific gravity and got it bangon with 1045 which is in spec according to the workshop manual.
Now I got my manual from an American subi forum called SLI and they do have just about every subi workshop manual there so if any member needs a manual that is the place to go.