Terrible mileage

[4x4_Welder]

Ok, I've been driving my 83 TD Rabbit for a couple months now, and have two primary issues-  I can only access about 9.5 gallons of fuel in the tank, and the mileage is bad.  Like the highest I've seen is high 30s bad.  It's even been in the high 20s. 
I know the turbo is trashed, it howls and barely makes boost, as soon as it starts spooling the black smoke comes on even at half throttle.  Today I ran about 300 miles (used the whole tank), and it didn't have much love for exceeding 60.  I checked the boot from the turbo to the intake and it is intact without leaks.  The air filter is clean, and the airbox is unrestricted.
I plan on replacing the turbo on Saturday, and make sure the wastegate is actually working, but I get the feeling this isn't 100% of the issue.  I am also looking at doing an in-frame overhaul, as the crank has significantly more end play than I find acceptable, and there does seem to be some blowby-  How much do the cylinders usually wear in these engines?  It has 140k, is it typical to get away with stock bore stuff and hone the cylinders, or do they wear a bit?  I ask because I did the head gaskets in my Alfa at 240k and the bores were perfect, still had excellent crosshatch and that is typical for those engines. 
The car had the timing belt replaced a couple years back, is it possible for improper cam timing to cause poor mileage but decent runability? 
A previous owner left a bit of a story on the car's early life in the glovebox, stating it spent a fair bit of time cruising I5 getting 55mpg, I'd be thrilled if I could even hit the mid to high 40s. 

[RabbitJockey]

i think you should check the timing regardless, there are a ton of mechanics out there who will just do a paint and pray timing belt change, and never check the pump timing.

id replace the turbo and check the timing and adjust if needed and then see where you're at

[ORCoaster]

First off that story in the glove box was a fairy tale so you would feel good about buying a car that wouldn't really perform that way. 

Before you start pulling stuff off I would just go in and measure the existing timing.  For reference you know.  The black smoke it an indication that you are over fueled and that might be due to the turbo or just the fuel screw turned in so you can....    well blow black smoke at those you don't like.  But it is a serious hit to the MPG and I think you can come back to that one later.

Once you have the reference timing then do the work you plan to do.  That turbo needs to go if it isn't making boost it isn't helping you get mileage or power either one.

Since you have other issues, like blowby I would think you have a stepwise progression to do with a fix here.  For sure the turbo and timing changes.  But then measure the cylinder compression PSI.  You may have one or all rings worn in the cylinders.  Only pulling the head will tell you if your cylinders have to be bored or honed.  Well you could try a leak down test though the glow plug holes too if you have that sort of equipment.  But it sounds like you are going to go deep into it anyway so you might have some time to drive it with at new turbo to see how that helps.

Cylinder wear is so variable on engines it really depends on the care the previous owners gave it.  Did they run it with low oil? Did they change the oil every 3,000 miles?  Did they overheat it any or always?   Again you will have answers when the head comes off.  If you have one of those scopes with a small enough probe you might get in the injector holes but I don't think they are self lit so you would need a light through the GP hole perhaps.

I am with RabbitJockey on just replacing the turbo and adjust the timing for now.  Report back with numbers after your first tank.

As to why you can't get at more of your fuel is a mystery to me.  There has to be something in the plumbing in the tank that isn't letting you pull fuel off the bottom of the tank.  You might be able to see in there through the fuel sender hole.  That comes off fairly simply and gives room to see in there or lower a small mirror and see.

Good luck on this.

[libbydiesel]

Bores wear quickly on these.  It would be very, very rare at 140k miles to have bores that are within spec.

[theman53]

If you are dumping fuel to spool a turbo that isn't spinning that should be a clue as to what is going on.

[idgtd]

Verify IP timing and check your wastegate carefully. When I did my TD install the wastegate poppet opened on the first pull....... and then stuck open. Took me a few minutes to figure out what was going on. Had to pull the turbo and free it up.