The slave cylinder is the problem area. Get under the car and pull the boot back from the slave. If there's fluid inside, it's time to replace/rebuild.
Those dents are drains, if memory serves. Put the jack stand perpendicular to the seam.
Konis work well with stock springs. I can't comment on the STR.ts as I've never tried those. The drilling isn't a big deal and alignment is not critical - there's rubber in the system to take care of that. A 1/2" hole should work fine. I suspect that's what most people actually use.
mw
HalfDork
10/3/11 9:35 p.m.
With stock springs I've had good luck with the kyb gr.'s. I like konis for stiffer springs.
I had problems with my clutch a few years ago- but before swapping, I bled it (it happened in winter, and I wasn't looking forward to frostbite). Still working. Worth a try, and you can bleed it via above it. But make sure you cover your forearms- the body seam there will scrape much skin away without some kind of protection.
On my '99, I used KYB AGX shocks with the stock springs and loved them.
FM does not carry the Konis, and they're not something I recommend with anything stiffer than stock springs - just the opposite of mw, apparently 
We carry the Tokico Illumina, which is my favorite affordable shock for the NA and NB.
I'm running Bilstien Sports on my 99 w/stock springs. I know people that use Koni STR with stock springs. But we autocross regularly besides driving the car daily. I've been told that what Keith recommended is a great DD setup.
I have to admit I don't have a whole lot of experience with stock springs. I can't think of when I last drove the Illuminas on stockers, so I can't really make that comparison. I know the Konis work well with the stock ones though.
