Broken turbo diverter valve works better than new one
 

My '87 951 is running great but I decided to test the diverter valve (DV) since it's easy to access and easy to test and possibly never been replaced.

Sure enough, it was easy to tell that the rubber diaphragm was torn. I never heard any signs of this failure. Sometimes you can hear a hoot or honk from the air passing through the tear.

I installed a new valve and was ready for some sort of tangible improvement in idle or in boost pressure. Strangely, there was a LOT more lag and the boost pressure was noticeably less than before. Previously, the needle would reach close to the "2" but with the new valve the needle barely got "1.5" on the gauge.

This made no sense to me. I reinstalled the old Bosch valve which definitely has a torn diaphragm and the performance has been restored with quick boost and higher max boost.

What's going on? Why is a broken valve working better than a brand new one? I checked the new one and it doesn't seem defective in any way.

Boost leak from when you were in there replacing the old DV? Everything tight and connected?

Quick google search shows OEM turbo boost at around 1.8bar (depending on elevation). Usually low boost is because of a boost leak (intake piping pre-throttle body leaks). High boost, (like 2 bar?) can be because of a small vacuum leak (wastegate depends on vacuum system in order to open at correct boost level to bypass exhaust gases from turbo, if there is a leak its not seeing the full amount of boost and not opening until later)

Diverter valve doesn't control boost (wastegate does), it simply vents excess metered/pressurized air between the throttle body and compressor back into the intake when the throttle is closed.