A Steinway grand piano, diamond jewelry and designer clothes--the briefly possessed booty of a government embezzler and four bribe takers--went on display and sale yesterday to a public clearly impressed with the ex-federal employes' good taste, if not their good sense and conduct.

The unusual "garage sale" will conclude today when the government auctions off the more expensive items it seized from the errant employes, one of whom single-handedly purchased most of the 500 items now being offered to bargain hunters.

"Well, he had a good time," said Pam Warren, casting an admiring eye on $31,000 worth of Ralph Lauren sportswear that her agency, the General Services Administration, put up for "greatly discounted" sale yesterday in the Commerce Department's auditorium. "But it would take forever to wear all these clothes."

The pricey Polo attire, sizes medium to extra large, and most of the other items gawked at or snapped up yesterday were purchased last summer by Michael J. Rupenthal, then a $20,775-a-year accounting technician at the Federal Election Commission. The goods were confiscated by the Justice Department after Rupenthal, 36, pleaded guilty to embezzling more than $558,000 in government funds by submitting fake vouchers to the Treasury Department and then having the checks mailed to his home.

During a six-week spending spree, according to federal officials, Rupenthal bought everything from top-of-the-line $9 shampoo to the $20,000 Steinway. The loot he accumulated, some of which still bore the original price tags yesterday, included clothes, cassette recordings of opera, Broadway shows and rock music, antique furniture, gold and diamond-studded jewelry, Waterford crystal and photographic equipment. In addition, he used the embezzled funds to buy three cars, a farm in Virginia and stocks, which have either been sold or will be sold at a later date, officials said.

Also being auctioned off today are golf clubs, chain saws, diamond rings and assorted other tools, household appliances and sports equipment accepted as bribes by four GSA employes convicted of paying contractors about $4 million for work they didn't do. Also, GSA has thrown in a Cartier watch, a diamond brooch, a sterling silver tray and other gifts accepted from shipbuilders, and later donated to the government, by the wife of a former Commerce Department official in charge of dispensing maritime subsidies.

The clothes, tapes and cosmetic toiletries, mostly new and unused and marked down as much as half price, drew more than 600 people to yesterday's sale. They picked over the goods and by 3 p.m., when the sale ended, had spent more than $2,500 to buy most of the items. The government hopes to recoup at least $200,000 from today's auction.

"I figured I could always use the clothes, especially for a bargain price," said Ken Sabanosh, who spent $33.75 and walked away with a pair of loafers and a pair of sports shoes, size 10D, the only size available.

Many other customers, however, looked aghast at some $110 sweaters, $55 robes and $43.75 dress shirts and took no comfort in being told they were worth twice that in exclusive shops.

Rupenthal, now serving a 20-month prison sentence, bought Ralph Lauren clothes in all styles and materials--30 pairs of slacks, 67 shirts, 40 sweaters. Federal officials say he also bought Polo canvas tote bags, valued between $32 and $52, to carry home his purchases, and one table yesterday was selling just the tote bags for half price.

While marveling at the amount of goods, however, Vince Terlep, an attorney with the Justice Department's civil division, had a word of advice lest some become too impressed.

"It's not our policy to let people keep the fruits of bribes and embezzlement," he said, noting that such wrongdoers face criminal charges, the confiscation of any ill-gotten goods and the scrutiny of the Internal Revenue Service. "This sale is making a statement that if you're into fraud, watch out, because we're going to get you." CAPTION: Picture, Lori Laitman, a Potomac music teacher, tickles the ivories of a $20,000 Steinway grand piano that will be auctioned off today by the government. UPI