Help me diagnose my turbo
 

Hi kids, I have a 1980 300SD W116 with 400,000 miles. Replaced the motor 6000 miles ago with a much newer one. Before and after the swap, the turbo produced 3 PSI at highway cruise, up to 8 PSI on hill climbs at 3000 RPM.
I put a limiter valve into the turbo sense line between the manifold and wastegate.
I have never adjusted the wastegate. With the limiter valve, I could get boost as high as 25 PSI, but I adjusted it to get just 14 PSI on 3000 RPM hill climbs. It was perfect.
Suddenly, now it only goes to 4 PSI, still holding 3 at cruise. I removed the valve and went back to a straight line to the turbo, no change. I have not reinstalled the valve and tightened it down yet, to see if I can bring the boost back up, because I want to understand what is happening.
My pressure gauge Tees into the line just before the electric valve on the firewall that is supposed to limit boost to protect the tranny.

Of course, the gauge could be failing, or have a leak in the hose. What else could be going wrong? Sticking my hand in the end of the turbo, the shaft seems to have no play and spins freely.

So how do these degrade? Is a seal failing, or a bearing won't let it spin up fast? I just thought I should try with the air filter removed, it is fairly dirty and I can imagine that might be limiting, but the 4PSI limit seems to be absolute without the valve installed.

Do I rebuild the turbo, buy a rebuilt one? From who? Diagnostics I should try?
Appreciate your wisdom!
Thanks!

If your turbo was failing I believe you would know. If the shaft turns freely, the compressor wheel isn't cutting into the housing, and it isn't puking oil out the exhaust most likely your turbos fine.

Sounds like your wastegate is stuck open or you have a massive boost leak, plug the wastegate off drive it and see if that brings your boost up, but in the process don't overboost it. You should be able to tell as soon as you take off. If you have boost well good your wastegate is not stuck open, if not your wastegate is stuck open or you have a massive boost leak.

This is assuming this is a normal wastegate that works off positive pressure like most normal wastegates as I'm new to mercedes myself but I've worked on diesels for the past 12 years, hopefully if I am wrong somebody will chime in and correct me.

Hope this helps.

It sounds right to me, but I too am new to mercedes.