Cummins N14 turbo is bad! Increasing power from 435hp to 525hp

Sorry if this is a long read but I have to explain thoroughly what the situation is and I have several questions at the end of this.

I bought a truck a month ago. It's a 2002 Volvo with a Cummins N14 Celect Plus engine (red top).The metal plate on the motor says 435 hp 1650 torque but I don't know if it was up-rated by the previous owners. It has 1.2 million miles on the trucks computer and the previous owner said it was rebuilt 300,000 miles ago from the owner before him but had no proof or paperwork. I really don't know if it was rebuilt at all or if the 1.2 million miles is correct even but it starts good, runs smooth, and pulls better than any truck I have driven before. It has very few oil leaks and looks clean. There is a little blow by from the breather tube but I'm not sure how much is too much. It's just a little smoke coming out, nothing that you can see from the parking lot unless you put your head underneath the truck and look directly at the tube. I've seen worse for sure.

I just got the truck on the road this week and made my first trip of 3200 miles. It ran very good and got me 7.6 MPG running through Wisconsin, Minnesota and North Dakota but I babied it and ran 61mph and kept the boost as low as I could when climbing hills. During this week I burned through a little more than 1 gallon of oil, and noticed some smoke coming from the exhaust when idling. It's not pouring out, but it's there. It's not pure white, but not black either, kind of a faint gray. I think that's the oil that I am burning.

If I idle for 30 minutes or more, the first time I take off and run it through the gears I can see a bunch of white smoke behind me, but then nothing when I am driving after that. It's always the first time I take off after idling for a while. A mechanic I spoke with said it's oil building up in the exhaust and it burns up and blows out when I take off.

I suspected maybe the piston rings were bad because of the blow by, but I also wanted to check the turbo. Today I pulled the intake pipes off and looked into the intake side of the turbo. There a small amount of soot on the intake side, and I was able to wiggle the turbine about 1mm side to side. It's not supposed to move at all right?

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Does this sound like a worn bearing in the turbo that is about to self destruct any day? Is there supposed to be any movement or is it supposed to be tight?

If I'm going to change the turbo I am looking at options for upgrading from 435 hp to something higher. Currently as I said I have 1650 torque. Ideally I want 525hp and 1850 torque. I would settle for 500hp 1850 torque as long as the torque rating is 1850 that's all I care about.

The serial number of the engine starts with 120. The CPL# on the engine stamp is 2592. My current turbo part# is Holset HT-60 3537074.

What Cummins parts list number is required for 525hp 1850tq? From what I could gather earlier today it seems to be the same parts list number which would mean my current turbo is also good for 525hp 1850tq?

What turbo should I buy if I want to upgrade?
Also if it does require a bigger turbo for 525hp, can I install that and keep my current 435hp for now until I can flash the ECM later?

 

Here are some photos.

The turbine has soot on it and has maybe 1mm of play side to side.

The last photo shows a 90 degree fitting with threads that goes into the intake piping, after the air filter. What is this??! It looks like a sensor is supposed to be in there but there is nothing. It's a hole that goes straight to the intake piping and can suck air. Should I plug it?

Also there is a wire coming from behind the exhaust manifold on the block. It was snipped. Is this the port for my EGT gauge? It currently is the only gauge that does not work in the truck.

Lastly, there is a plug on the exhaust side of the front-most cylinder head. There are pins, but no plug is attached to it. I can't find any other wires. What sensor is supposed to be here?

 

Which is the pyrometer connector? The one with the pins or the wire you can see in the photo that was snipped?

 

http://www.interstate-mcbee.com/media/documents/parts-catalog/cummins-n14-2015-lr.pdf
I found this. It seems that the 525 engine has a different turbo and different injectors compared to my motor. I dont know about the camshaft though.

Also I will find a bolt to plug up that 90 degree fitting asap.

 

The fins were not touching the housing. I did not check the exhaust side yet. If I am burning oil I think there would be oil in there no matter what right? Whether turbo is bad or not?