Wow, I just watched the video. All I really had to see was that video. I called it right on day one when I first listened to your symptoms.
That smoking out the back is also exactly what happens.

I did that to my engine when running with no intercooler at about 6psi. That means that either it wasn't tuned well or that front mount isn't working that well.
If you have an water to air intercooler then it will be more efficient at low speeds. He also may have been running it on high boost too, who knows.
From everything, it sounds to me like he knew he broke it, or suspected as much and wanted to unload it.
Really, just fixing a few problems with the pipes and throwing in a shortblock would work fine.

I definitely liked the sound of its exhaust though.

Former owner of '99 CSVT - Silver #222/2760 356/334 wHP/TQ at 10psi on pump gas! See My Mods '05 Volvo S40 Turbo 5 AWD with 6spd, Passion Red '06 Mazda5 Touring, 5spd,MTX, Black