87 GN won't rev past 3500rpm and smokes badly

[JohnnyD]

I have a problem that is difficult for me to diagnose with a Turbo Regal. The car starts and runs smoothly up to 3500 rpm. The problem at hand is it misfires/backfires at 3500 rpm and also puts out a lot of oil smoke through the exhaust. The car is undrivable as is. We have completely tested all parts of the ignition system and replaced the spark plugs and the coil pack, and tested cam sensor and the ignition control module (the one under the coil pack). Nothing done to the ignition timing system had any effect on the problem. We had installed a new oxygen sensor in the exhaust, but when we pulled it out (zero miles, just used when diagnosing the problem and couldn't drive the car) the sensor was completely coated with "soot".

I am wondering if the large amount of oil smoke in the exhaust is causing a "trouble code" to be generated from the O2 sensor amd the ECM is reacting by mis-adjusting the timing or fuel delivery, thus causing the misfiring? Has anyone had a very smokey turbo motor? If so what caused and cured it?

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Problem History and Car History are below
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Original Problem

The car starts and runs smoothly up to 3500 rpm. The problem at hand is it misfires/backfires at 3500 rpm and also puts out a lot of oil smoke through the exhaust, especially when revving from idle to breakup (3500 rpm). We did a compression test which showed cylinder readings from 124-129, except for one reading of 140 lbs. We've replaced the plugs, wires, coil pack, oil filter and oil (several times). The coolant and oil are clean and we've checked for manifold and air delivery ducting leaks without finding any. When the problem first occurred it was a backfire, with a gunshot-like report as if a cylinder had fired while an exhaust valve was still open. The original coil pack was a black plastic cased unit, perhaps a high performance one judging by the high quality of the ignition wires installed (Magnecor Race Wires). When we replaced the coil pack with a NAPA sources OEM/Stock type replacement, the backfire went away and was replaced by a failure to fire or run smoothly beyond 3400-3500 rpm. Changing back to the original coilpack brought back the backfiring condition.
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After testing rhe cam sensor (at Jack's kind advice)

We pulled the cam sensor and it appears to be OK. The key at the bottom of the shaft was solid and unmarked. I disassembled the upper sensor section and it was clean and the shutter cup was solidly screwed down onto the shaft. The portion of the oil pump that is visble when the cam sensor is removed also appears OK. So I think we've ruled out the cam sensor as the source of the problem.

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Car History (as far as we know it)

The car is a 1985 with a 1987 Grand National drive train. It's been modified for performance with a bigger turbo (a garret size 6, don't know the trim), an Airesearch intercooler with a Duttweiler Neck added, a Translator Plus MAF translator, an Alkycontrol methanol injection system, a passenger side Breather By-Pass Kit, a B&M Shifter, and a four-link modified rear-end. It also has a Scanmaster installed. That's about all I know as my son bought it several months ago, from a seller who had heard from the original owner that the modifications had been done by Cotton's Performance in Agawam Mass (all the modifcations appeared to be first class work). When he bought the car it ran fine with some oil smoke/smell but suffered from very low oil pressure. To address that problem we installed a good digital oil pressure gauge to confirm the reading on the cheap analog/mechanical gauge previously installed. Then we installed an upgraded, higher volume pump oil pump (a Melling K-201 HV) and used the middle weight spring supplied with the pump (after reading many forum posts on the right choice). When installing the pump we went through the timing procedure twice to make sure it was right. The oil pressure problem was fixed (now 30+ pounds at 1100 rpm going to about 55+ at 3500 rpm) but soon after the car began to have the new problems. We tried disconnecting the cam position sensor (on the advice of a friend) but the car just ran roughly, but ran much better when the sensor was reconnected.