The shifter assembly sits in a hole in the tunnel, that's normal. It should have a rubber gasket/boot built into the bottom of it to seal things off.
I've done the cable from below before, certainly easier to remove the shifter, but that adds some work in itself....
Make sure you get the bushing where the cable meets the shifter, this is usually seized in there and a big part of your problem. 35117AG000 - Bushing Complete Select Lever. Connector Select Lever -23. 89 F-4WAT. 24- - Genuine Subaru Part
And the nut on the end of the cable is not included with the cable, FYI.
I've done the cable from below before, certainly easier to remove the shifter, but that adds some work in itself....
Make sure you get the bushing where the cable meets the shifter, this is usually seized in there and a big part of your problem. 35117AG000 - Bushing Complete Select Lever. Connector Select Lever -23. 89 F-4WAT. 24- - Genuine Subaru Part
And the nut on the end of the cable is not included with the cable, FYI.