Andy: If I pull the nut and stud off the top of the waste gate, wouldn't hammering downwards cause the wastegate to open even more???
Andy is right and I think has a decent idea for you here. Hammering on a punch through the stud hole on the KKK wastegate would cause it to close. The K24 diaphgram and wastegate valve moves outwards (away from the turbine housing, in a pulling manner) when it opens. Just be careful not to bugger up those threads if you try this.
Have you considered that your problem may be just a badly pitted wastegate valve seat, and not a frozen valve? If your valve seat is pitted, it could still leak even if it is frozen in the full closed position. In fact I found my K24 wastegate valve seat was leaky (working on a fix, but it would require removing the wastegate.)
I'd think the K24 with properly sealed wastegate (good sealing valve seat) would boost up a lot higher than 12 psi with wastegate completely sealed shut, but I haven't tested it on the car yet like Andy2 has. I have tested the (quite similar) Garret 1.6lTD turbo though, and found it achieved 14psi boost without what seems like a whole lot of fueling when the RPMs were in "on-boost" range.
Andy2 - I'm curious if you are sure that your K24's wastegate is sealing completely when closed, because if 12psi is all it can muster at stock fueling, I wonder a wastegate was put on the turbo in the first place. 12psi isn't not even enough boost pressure to open the pressure relief valve on the intake manifold.
Andy2's idea might be worth a try as a possible quick and dirty fix. If your wastegate can really is facing straight up with the turbo installed in the motor, there is something else you can try with turbo left installed. You could remove the boost tube hardline connection and squirt some heat valve lubricant/ penetrsting oil into the boost can and the follow it up with some air pressure to try and force it into the valve stem. That all might help get if broken free and clean it out somewhat. As long as the turbo is oriented so gravity would make the oil that is inside the wastegate can puddle around the valve guide, the penetrating oil I'd think would eventually make its way through the valve guide and exit the exhaust system harmlessly, and thus be "self cleaning".
If you try any of this, please let us know how it works, and good luck.
PS - I'm curious to see how your wastegate is mounted in a totally vertical position with can straight up. I usually recall 1.6lTD wastegates being more horizontally-mounted... got any engine compartment pics?