Slow boost at high revs

I really don't know what may be happening... the thing is that the boost kicks in fine but at around 4000-4500 rpm, the revs slow down (the cars seems as it is not moving), the turbo is sucking lots of air, and if you see in the rear view mirror, a huge ball of black smoke is coming out... but a HUGE ball of black smoke... any ideas what is happening and why the boost kicks in fine at 3000 but at 4000 starts slowing and the revs wont go pass 5000??

Well i know that the CT-26 doesnt pull all that well to the redline but uhh, a HUGE ball of black smoke... i dunno man

Sounds like you may have a bad turbo. A huge ball of black smoke would be a bad sign for any car. Are you doing this on a cold engine? Is the engine at full operating temp?

You deffinetly have an engine problem and need to stay out of the boost or not even drive the car untill it is fixed.

I have the CT20B turbo... that black smoke may be oil burning... which is normal at high revs with any car, but not that much... and it has never had a problem in reaching redline..... I have set it for 12psi and it can goup to 14.7 psi without getting fuel cut....

Black smoke is NOT oil. It is fuel.
Oil burns blue usaully (can be white if hot enough)

You are blowing through unbunrt fuel.
You are running extremely rich.
What mods do you have on your car?
Have you recently messed with the AFM?

Do you have a BOV on the car? (first guess for culprit) After market BOVs suck and will cause all sorts of problems.

Check the connections on your intercooler pipes to make sure they are not leaking under boost.

Either you are running too much fuel OR your boosted air is escaping (probably form your BOV).

I would also reommend buying new igntion components form TOYOTA: cap, rotor and wires ... and some NGK copper plugs.

I don't have many mods actually... I have the CT20B turbo, HKS Exhaust System, HKS turbo kit (I had to take out the HKS turbo because it messed up but left everything else, and replaced the CT20B back) the original blow off valve (which I took out the hose that sends back the pressure back into the air flow so that instead, it sends out the pressure to the outside, creating the characteristical noise), HKS Turbo Timer, K&N Air Filter.

That be it as of right now... right now I am changing all the head gaskets since it is overheating like hell when running on the highway and in the streets a little bit....

I have not messed with the ECU or anything like that, not done anything weird. Fuel cut at 14.7psi, can run up to 14psi easily but normally hits the fuel cut so I am running it at 12psi right now.

Any ideas why my turbo lacks pressure, or lets say, not giving the correct amount of pressure and having the revs stand still??

I use 97 octane gas sometimes but usually run it with 95 octane....

the original blow off valve (which I took out the hose that sends back the pressure back into the air flow so that instead, it sends out the pressure to the outside, creating the characteristical noise)
HUGE MISTAKE.

The original piece is NOT a BOV (blow off valve), it is a BPV (By-Pass Valve). It allows airflow in BOTH DIRECTIONS. If you have it vented to atmosphere, then you are sucking in UNFILTERED air. God only knows what you oculd have sucked into your engine.

The OEM BPV is the BEST performing valve you can have on your MR2, changes to it or buying an aftermarket one screws with the performance of your car in a negative way. The "cool noise" is not worth it.
More details here:
http://jekylandhyde.madpowaz.com/bov.htm

You are also running extremely rich becuase the AFM has measured the air coming in and you have now vented it ... the ECU already sent fuel for that air and the air is not there ... so you are running really rich (black smoke).