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Re: '87 5K Turbo trouble
If you see some oil in the IC hoses, that is normal. Doesn't mean your
turbo is bad, however, if you were driving around with a damaged head, that
could be cause of power loss. If you need a new turbo, I'd just go for an
RS2 turbo, but you can get your k26 rebuilt fairly inexpensively through some
mail order type places (just look in the back of AutoWeek).
BTW, All one piece (early 10V turbo) EM's crack. Fact of life. You can
replace it with one of the later two-piece units, which don't crack, but they
are hard to find. After you get the head back and the turbo rebuilt, I'd
replace the head gasket with a new one and get some Raceware fastners to help
ensure it won't blow again. I'd replace valave guides and seals, get some new
injectors and some new injector seals. May not be a bad time to replace the
hydraulic lifters as well. If the previous owner of your car had the car
chipped, it obviously has a stiffer WG spring as well (or you would not be
seeing 1.7-1.8 on the boost gauge).