Most likely a broken boost signal line to the ALDA or a bad pressure switch or switchover valve. This will vent the boost line to the ALDA and deprive you a fuel, hence horsepower.

Check the line from the rear of the intake manifold to the switchover valve on the firewal and from there to the ALDA (big silver "can" on the injection pump). The bolt on the manifold can be plugged, too.

A sudden loss of power sounds like a boost signal problem rather than a turbo -- turbo usually just fades away. They can do fun things like refuse to spin up cold (the Volvo did that) but usually get noisy for a while and start to use oil.

YOu can check the turbo by removing the air filter housing and hose to the front of the turbo. This will expose the compressor wheel. Gently turn it by hand, ENGINE OFF -- please do not leave the compressor wheel exposed with the engine running, very dangerous. It should spin freely with no binding or grinding, and must have no axial play. Some radial play, just perceptible, is OK.

Note that if it takes any effort to turn it, it won't spin up at all!

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!