All the 1.6 TD's had a BOV or overboost protector from the factory. Giles makes a nice block off plate for the intake mani port http://www.vwdiesel.net/forum/index.php?topic=18289.0.
the later TDs had no such devise.. so it must not have been that important.. i think they did away with them in like 1988?
Heres a little quote from Wikipedia:
Definitions
A typical piston-type dump valve, used in auto racing. Unlike a blowoff valve, this one does not vent to the atmosphere. The small hose at the top is a feed from the intake manifold.
A compressor bypass valve (CBV), also known as a pressure relief valve or diverter valve, is a manifold vacuum-actuated valve designed to release pressure in the intake system of a turbocharged vehicle when the throttle is lifted or closed. This air pressure is re-circulated back into the non-pressurized end of the intake (before the turbo) but after the mass airflow sensor.
A blowoff valve, (sometimes "hooter valve", not to be confused with a bypass valve) performs the same task but releases the air into the atmosphere instead of recirculating it. The blowoff action produces a range of distinctive hissing sounds, depending on the exit design. Some blowoff valves are sold with a trumpet-shaped exit that intentionally amplifies the sound. Some turbocharged vehicle owners may purchase a blowoff valve solely for the auditory effect even when the function is not required by normal engine operation. Motor sports governed by the FIA have made it illegal to vent unmuffled blowoff valves to the atmosphere.[citation needed]
Blowoff valves are used to prevent compressor surge, a phenomenon that readily occurs when lifting off the throttle of an unvented, turbocharged engine. When the throttle plate on a turbocharged engine closes, the high pressure air in the intake system is trapped by the throttle and a pressure wave is forced back into the compressor. The compressor wheel slows rapidly and may even stall, and the driver will notice a fluttering air sound. The rapid slowing or stalling stresses the turbo and imparts severe turbo lag if the driver accelerates immediately after the surge event.
and what you are hearing is simply the turbo slowing down once you let off the throttle.. not the wastegate closing, or the BOV (HEY!! your car doesnt even have one!!)
you are smoking more because your cone filter flowed more air.. and it seems like your car has more bottom end, because it actually has LESS top end..