Well, started troubleshooting and have targeted the area of the problem among other questionable things.

Started by spraying carb cleaner all over the manifold area and nothing.

Disassembled the BOV and saw that it might be missing an O-ring. I assembled it and I can blow through it although barely. Still, swapped with the old Bosch unit which I could not blow air through. No changes to behavior anyways.

Checked the AAV again by clamping the hose going to the IC and no change in idle. Still, decided to remove the hose going to the IC and indeed, the AAV is leaking air but I am not sure if it is normal for it to leak some air since it is completely mechanical and the little door closing I don't think is leak proof. I put my thumb on the hose going to the AAV and can feel the suction. In order to eliminate this as the culprit, I proceeded to put temporary caps on the IC and the AAV and again, no change in behavior. Could someone put your thumb on your AAV an see if you can feel a normal suction on it when it is supposed to be shut?

So in my frustration I started bathing all possible areas with the Carb cleaner, I know it is not the best thing but remember that by then I had inhaled lots of carbon dioxide and unburned fuel. FOUND THE LEAK OR VACUMM!! (Excuse my screaming), I sprayed the turbo to IC neck until it would drip down and voilá, car quits. So must be one of the connections to the turbo (Air intake or compressor output) or the thick hose that runs close to the two.

I am letting the car cool down so I can get my hands in there. I guess I may have no excuse to move to EFI at the moment.

Thanks again for all the input and I will post back the final diagnosis/solution.

BTW - Thanks to one of the vendors who made me a very kind offer to send me a 3.6 WUR free of charge for testing. I would mention the name but I am not sure if I can or should. When EFI time comes, I will be giving them a call.

Ok, car cooled down, started inspection and found out the problem was the goose neck IC hose was cracked at the turbo end. I cut the bad part, about 1/4 of an inch, and put it back on. Problem solved. Car is much faster and it can transition like it should. I had to adjust the mixture towards the lean side about a full turn, that's how much the mixture was compensating for the leak.

I did another carb test and all perfect in the turbo area, but, I sprayed around the throttle body and the idle changed a little, so I have a minute leak somewhere there and I think it is a worn orange O-ring. That said, I will take care of it but the car is back to normal.

I always thought that the mix control screw had 1/2 of a turn range... slight turn should make significant differenc on the CO level... but regardless, glad the car is back to normal.

Excellent excellent excellent! So glad the "squirt and find" worked for you! I just love doing these internet diagnoses....they seem to cycle from the simple - to the extreme - to the downright scarey OMG it will never run right again - back to the simple. Glad in your instance it was simple. Now go out and rod the hell out of her!!!