Header wrap is not to be used by itself.
Use a sealer to keep the water out.
DEI makes a very good sealant and comes in colors.
I have written about this numerous time and it is in the archives here and in the Subie swap forums.

All my exhaust systems have some wrap on them and have been sealed properly.
No Rust at all. I have checked.

When driving in the rain, drag you brakes for a couple thousand feet before stopping and let the van idle for a minute or two after reaching your destination to keep water out of the brake system and rust the pads to the drums and heat the wrap up enough to remove the water from it.

dylan

----- Original Message ----
From: Chris S <szpejankowski@GMAIL.COM>
To: vanagon@GERRY.VANAGON.COM
Sent: Monday, July 21, 2008 10:24:31 PM
Subject: The DEEP, DARK secret of fiberglass exhaust wrap discovered

Well, I bought some exhaust wrap, but not to wrap my exhaust, mind you.  I
needed to shield some not-so-hot parts from the hotter-than-H parts.  I've
read reports of exhaust headers rusting very quickly after application of
fiberglass exhaust wrap.  Why?  The stuff soaks up water like a sponge and
holds it.  Yes, I just tested it.  So you can imagine what happens over
night when the dew point drops, no?  Yes.  The doom of all bare steel,
moisture, gets sucked up against the headers.

It seems that sealing it against moisture would be the correct way to apply
the stuff, which can be done by applying the appropriate and expensive
sealant.

No problem for stainless steel headers, right?  Maybe not so, since the wrap
causes the temperature of the headers go up, which may be too much of heat
stress for the metal to handle.  And that might be another DEEP, DARK secret
in itself.

Chris S.