older HS Tarm

keep the tarm they build a quality unit. It is worth having in the long run. look at ebay to check out what the going price for a used boiler goes for.

Is the Tarm backup for just domestic hot water, or for space heating as well?

Part of the equation is how much you use it. If you're burning 100 gallons per year at $3.00 per gallon, the difference between 75% efficient and 90% efficient would be less than $50 a year. Might make you feel good about being efficient, but that's a really long payback on purely financial terms.

At 1000 gallons per year, the difference is more like $500, and gets closer to making financial sense.

Relax - nobody's going to beat you up for using such a lovely piece of equipment as a -gasp- oil boiler.

On-demand hot water heaters appear to be a simple and very cost-effective solution - much more efficient than oil/indirect (which was the least expensive operating cost of any system when we built our house).

Rigt now, electric is pretty competitive with oil, and would almost certainly be cheaper in your case.

If you're adventurous, there are other schemes. I've seen an electric hot water heater that was heated by a woodstove via a thermosiphon loop. Needs a tempering valve to limit outlet temperature. The electric kicks in when needed, but very rarely during wood heat season. The HW tank needs to be near and above the woodstove for that to work, but there are plenty of other ideas out there.

Maybe sell the Tarm and the indirect tank (I might take it myself) and use the money towards on-demand or conventional electric....

Used wood boilers don't have a lot of residual value, mainly because you can't tell by looking at them what condition they're in. But I'm sure you could get $500 or $1,000 for a Tarm, especially if you've never built a wood fire in it. Old technology, unfortunately, but as nofossil noted, a quality piece of equipment.

But I'd be inclined to keep it. Might be a good selling point if you ever decide to sell your house.

Since I owned Tarm USA for a number of years, I feel qualified to tell you that there is no easy way to increase the efficiency of an older Multi-Fuel.

The newer series (500) is a bit better than the older series (OT) - you can tell the difference because the OT has the wood loading door on the wide side, while the other has it on the end.

If you are not going to use it for the other fuels, I think you are on the right track by considering a more efficiency oil-only unit. Because we are in a bit of a wood burning "upside", you may even be able to get some reasonable money for the Tarm and have someone remove it (a rigger)...

500 Series is much better than the OT with oil since it has a full set of firetubes, etc.

Yes, there was a problem with those separation baffles - the new ones might come with a kit that contains refractory protectors which install below them.

I have been using a 500 for 4 yrs now. I removed it for the previous owner because he used it primarily with oil. It was very inefficient. The wood coal side works real well for me. I would not even consider using it with an oil burner unless the oil was for backup only. Apparently they were originally designed to operate primarily on wood and the oil would kick in at the end of the heating cycle when the wood fire goes out if your not home or in the early morning hours before you get up. I think they are a great unit if used properly.