A boost gauge and egt are good additions.
Without a boost guage, you're guessing what is happening under the hood when troubleshooting "smoking" issues.
You've got a 98, so the fuel cannot be "turned up" without a custom reflash of the PCM. So we'll assume you're running a stock program.
If the vacuum pump is good (should pull around 20 in/hg), other sources of boost leak are cracked plastic vacuum lines, dodgy solenoid or failing wastegate diaphragm.
You could be looking at a mechanical failure or the turbo, but given you description I'd say your gm8 is running fine and you have a vacuum issue somewhere.
When you're at idle and the wastegate is commanded closed by the PCM you should not be able to move the wastegate lever. If you can, you're probably loosing vacuum somewhere.
When you get up to speed, there can be 30-40 psi of drive pressure pushing against that wastegate and that's enough to pop the gate off it's seat and loose some boost if the vac system isn't up to *****.
You loose some boost before the PCM commands it and you will get smoke.
It's also possible you could be loosing boost in the intake manifold itself. If you have a Vin "S" 6.5 (L56) there's a round gasket on the EGR port that can cause smoking and poor running (IE: lack of power). Vin "F" engines (L65) do not have this issue. Other sources of boost leak in the intake manifold usually start giving a high pitched "whistle" when you get around 4-5 psi. This is not "turbo whistle", you'll know it if you hear it.
I run my own calibration in my 98 (I tune my own PCM's with tunercat II, costs around a grand to get it) and the only time I get any smoke is a puff at start. If I'm working it hard I can get a barely perceptible haze which looks more like a heat shimmer than anything else.
When it was stock I would have to be working it really hard to smoke it. When my wastegate solenoid was intermittent, it would smoke like a WWII destroyer running from the Nazi's on a long uphill stretch. Smoking usually means your egt's are running a bit hotter than necessary, usually due to boost issues.
A 6.5 diesel is one of the cleanest runners on the road for old gen type diesels.
Mine charges like an enraged bull past 60, still jammin hard at 75. Never topped it out, but it's an easy top the ton mark truck. Pulls the trialer in my sig at just over 9,000 lbs without breaking a sweat.
I've removed all the limiters on mine also. IE: speed, boost, etc.
If you're planning to spend money on the truck I would recommend the retuned PCM and exhaust first, plus an egt gauge.
Good vendors of aftermarket PCM's for OBDII trucks are HEath diesel and John Kennedy Diesel.
Heath prefers to set his tunes up for the Turbomaster wastegate controller but he can do vac ssytems, John Kennedy prefers teh stock vac system and tunes very well for that.
Westers Garage tunes 6.5 diesels, but I don't think they reflash PCM's any more, you have to show up on the rollers to have them tailor it to you.
Ron Schoolcraft does good things with 6.5's, but he's way, WAY,
WWAAAAAYYYYY overpriced IMHO.
Stay away from Walt at SSDiesel. Trust me, stay away from him.
If you run across and "A1 customs" for 6.5's be warned he is a scammer of the highest order. Buying from him is like chucking your money in the crapper and flushing.
Boost gauge is good to keep an eye on things if you're running the vac system, essential if you run a mechanical wastegate control like the Heath Diesel Turbo master.
Run too much boost on a stock calibration and it will defuel when you hit the overboost code limit.
The HX40 is not a bolt on "as is", but you can buy a kit that makes it essentially bolt on...mostly a downpipe adapter from the turbo to the stock exhaust downpipe. The HX40 is offered in a dizzying array of configurations. Everything from different bladed impellers to differnt sized housings. Holset matches them to the OEM application they are intended for.
The HX40WII is a Chinese knockoff of the Holset HX40. I would say use at your own risk. Chinese castings are very much a gamble unless they are subject to QC processes through a retailer with a rep to maintain. There are also several different models available but no real way of knowing which one you're getting until you open the box. Such is the way with "boat delivered" parts. People grab them off eBay - 'Nuff said.
The ATT turbo is a direct bolt on as is. It's more of a towing turbo though. It spools up a little slower than an HX40 but once it gets on the boil it's a heck of a grunter. It is a Chinese knockoff of the Mitsubishi td-07-22a, but Denis them checks them before they are sent out. Like everything, something gets missed every now and then but he's always done right by those who have issues.
I think that's enough for you to think about for now so I'll stop tying.....