  During the disk-mediated accretion phase, the high-resolution X-ray spectrum
of the low-mass X-ray binary system EXO 0748-676 reveals a photoionized plasma
which is orbiting the neutron star. Our observations with the Chandra High
Energy Transmission Grating Spectrometer (HETGS) constrain the structure of the
upper layers of the accretion disk, by means of the recombination emission
lines from the H-like and He-like ions of O, Ne, and Mg, which have a mean
velocity broadening of 750 +- 120 km/s. The Mg XI emission region has density
n_e > 10^12 cm^-3 and is located within 7 x 10^9 and 6 x 10^10 cm of the
neutron star, while the temperature of the Ne X region is kT < 20 eV. These
lines favor a vertically stratified distribution of ions in the disk. The
spectra show that the line region is spatially extended and unabsorbed, while
the continuum region is compact and heavily absorbed. The absorber has variable
column density and is composed of both neutral and ionized gas, which can
explain the stochastic and periodic X-ray intensity dips, the X-ray continuum
evolution, and the O VII and Mg XI K-shell absorption edges. The absorber is
located 8 to 15 deg above the disk midplane, inclusive of two bulges near the
disk edge. This outer disk gas may participate in the outflow of ionized plasma
which was previously identified in XMM-Newton grating spectra obtained during
type I bursts. The thickened photoionized region above the disk can be produced
by heating from the neutron star X-rays and by the impact of the accretion
stream.
