You may have an OD problem, but I think there's something else causing your fuel economy problem. While OD helps on the highway, I don't think it would make a 6 or 8 mpg difference. (You should be getting about 22-24 highway.)

To confirm OD operation, check the the tachometer reading at, say, 60 mph. If the OD is working, it should be in the 2400 rpm range (no lockup torque converter on a turbo); it would be perhaps 3300 without it.

The fuel economy you're experiencing is about what I got when the ECM failed on my '89. The car goes into a "limp home mode" and runs rich, sometimes to the point of blowing black smoke, but not necessarily; the nice part of this limp home mode is near normal power and drivability, unlike new cars that will only run at a high idle. Is the check engine light on?