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IC (intercooled) refers to the compressed (and warmed) intake air running through an air to air heat exchanger called an intercooler (imagine that) - you see when a gas is compressed it heats up (you'll learn this in physics) PV=nrT plus since it's an exhaust driven TURBO (turbine) the whole apparatus gets hot enough to cook your....well you get the picture...the compressed air needs cooling and quick, before entering your intake..
Water cooled is refering to the turbo cooling system that is actually part of your car's regular old radiator and H2O pump 'n stuff. On stock early 240 turbos there weren't nutin' but the oil providin' cooling and lubin' of course.
This is a good thing to look for (as is the IC) as not all 240's came with IC's and water cooled turbo's. Indeed the water cooled unit indicates maybe she ain't stock. Even the first 740 turbos didn't have water cooled units but they was all IC'd.
Funny thing is swapping a turbo ain't no big thang for a young 'n such as yerself. It's the broked manifold studs that slow you down.
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