They had that in '84 - wierd.

I think it's the same device all the trap oxidiser cars
got in 86/87. Basically a boost limiter - it recirculates
air back to the input side of the turbocharger. The shop
manual for my '87 124 diesel says that it is used to
manage the boost levels to suit the trap oxidiser, without
going into any additional detail. I don't know why your 84
would have it, since there was no trapox that year.

My own theory is that it was used to limit the unthrottled
air flow through the engine to raise exhaust gas temperatures.
The trap oxidiser had to reach a very high temperature before
it began burning soot particles.

The vacuum feed to the boost modulation valve has mysteriously
become disconnected on my '87, and the car runs great. Once
a year I have to reconnect it to pass a visual inspection, and
the car runs like total crud until the gremlins get after it
again. You'll be driving down the road, and all of a sudden
all the boost disappears. You have to go to about half throttle
to maintian 40MPH. Thing also smokes like crazy with the
valve connected - cuts down on tailgaters, I guess.

Try disconnecting the vacuum feed to the unit; either at the
valve itself or further upstream. The computer control on my
87 is an open loop system, so it doesn't have any idea whether
the boost modulation is operating or not, hence does not
complain about the modifications. Give it a shot and let us
know how the car runs.