Originally Posted by rcounts

Welcome.

First step: get everything up to spec. Valves adjusted, injectors cleaned and pop tested. Timing set to spec. Chain stretch checked (and corrected if necessary - by replacing it or installing an offset cam key). Clean the banjo bolt and line from the intake to the ALDA. New fuel filters. Maybe even run a Diesel Purge to make sure things are cleaned out.

Then, once all is up to factory spec, or as close as you can reasonably get it, you can install an EGT guage and boost guage. Once you have these two essential guages, you can start making mods to increase power.

First I'd install a boost pressure controller (if needed) to get the boost back up to 12 PSI (factory spec) or maybe a couple of PSI higher, but you don't want to push it up higher than about 14 PSI.

Then you can also adjust the ALDA and a few other IP settings to get a little more fuel to go along with the additional boost (do a search, there are lots of posts about adjustments you can do). Performance injectors are always another option, though not exactly a cheap one. You can also remove the muffler and/or resonator, though it will make it a little louder. Upsizing the exhaust from the turbo back can't hurt - up to about 3" (anything bigger would be a waste).

Most of these things should have negligable effect on mpg. The biggest determinant of your mpg is driving style and conditions. A heavy right foot and stop and go driving are the mpg killers with these cars.

If bottom end acceleration is what you're after, and you don't mind sacrificing a little mpg to get it, you can change the rear end to one with a higher numerical ratio (like a 3.67 out of a 240D). You probably have a 3.08, or possibly a 2.88 in there now.

Some people attempt to build a more free-flowing less restrictive intake, but the jury is out on that one. Some say the stock cold-air setup is about as good as it is going to get unless you compromise filtration. I've always thought that all the twists and turns of the stock intake setup can't be the least restrictive of all possibilities.

I've wanted to try a really BIG open-element cannister-style filter mounted behind the passenger headlight, and isolated from the underhood engine heat by a partition. Then connect it to the turbo inlet with a smooth gradual-curved intake pipe. Seems to me that would have to make for better intake flow. At least then the airstream wouldn't have to make two 180* turns between the air cleaner inlet and the turbo inlet. Again, the jury is still out on that one.