1984 300sd

Issues I've been having are:

Really low power up steep Pennsylvania hills, 35-40 mph tops, if that..
LOTS of acceleration smoke, grayish-blue? (Can't determine the difference between oil smoke and fuel)

Replaced the turbo and determined the new one was not leaking oil, also I made absolute sure the IP was drip timed correctly and even took off the ALDA w/ no change. Naturally I did a valve adjustment with clean filters all around w/ functioning kickdown switch w/ good oil and fluids.

So I put a boost gauge at the intake for some diagnosis help (I did find and seal intake leaks.. even switching to the non-egr manifold from a junkyard.)

When the car is on and at idle, the needle shakes back and forth approx 2 inches of Hg each way. ~ When I accelerate (with lots of smoke btw, idle has barely any smoke), the needle jitters in a 5 in-hg range with its center going up to around 12-13 psi. At no point is the needle steady. I DO recall a steady point, but something occurred that it started doing this?

For kicks and giggles.. I did seal up and blow air into the turbo for it to come out by the crankshaft.. I can feel the pressure from the blowoff tube.

I'm thinking my valve guides may be shot and my best option is to replace the head? Does anybody have any sound advice?