ok your post is little confused...yoiur either getting boost, or your not!

The boost guage will be connected to the inlet manafold so the engien is GETTING the boost its just not using it!

So given that we believe its getting the boost what else could be wrong, well engiens need relatively few things to produce power, air, fuel, spark and a clear exhasut path being the normal issues...

we believe we have air (we have boost presure), we have some form of exhaust (otherwise no boost!) we could have a partially blocked exhaust, a problem with fuel (likely due to your o2 issues)or a spark issue...
what sounds like its happening to me is that the waste gate isnt opening...so its overboosting and then the cut out on the fuel comes in to stop the engine going bang....

I would check your waste gate...