The fact you have excessive oil in the intake is BAD, really bad. The combustion process cannot burn off of that oil and over time will coat your front/rear o2 sensors, maybe your EGT sensor, and your cat (if you still have any). That will cause the ECU to not get o2 reading from the exhaust then pushing an even more rich A/F ratio which will foul spark plugs too.
First I would get another td04 turbo from a similar year wrx, next I would highly suggest you take the TurboXS ECU off and return to stock (intake, downpipe, OEM EBCS). If you look at your pic behinds the ABS/intake you'll see a teal(ish) connector near the fender, that's for you EBCS, if it's still connected to it you're in luck!
I understand you have money in parts currently, but you don't have any way right meow to determine if they're all working properly or even set up to do so reliably. Sure the parts could be setup and working the way they wanted, but that doesn't mean they're set up to be reliable, boosting a td04 above 18PSI for a long period of time is known to cause turbo failure, and also just creates more heat through the intake from overworking the turbo out of its efficiency range. The boost fluttering tells me the tune made for it is hitting max boost FAST (like a MBC is known for), but then it's cannot taper off efficiently which is the fluttering of boost (in PSI) as you mentioned. MBCs cannot taper boost, only an EBCS can and that's why Subaru used an EBCS...reliability and control.
That ECU also requires a tuner that's familiar and comfortable with tuning it, there's mad options for tuning hardware and that's just one. Not all tuners are familiar with all hardware, and if they are then damn ask that guy questions! Also you don't have a conventional MBC setup either, you have what's called a "mutli-stage MBC" which kind of works like an EBCS except the fact it can only allow 2 "stages" of boost (low/high) and they work in tandem..say low boost under 4k RPMs/high boost above 4k RPMs. That doesn't work with the OEM strategy of full boost then tapering down PSI after 5500RPMs.
As for the blue smoke, yes your turbo is done. Stop driving it asap or you could cause more damage down the road. A quick way you can check your piston rings for failure is to run the engine, get it to operating temps (if the radiator fan kicks on then you're at temp), rev the car a bit to get oil flowing/etc, then let it idle for a couple minutes and shut it down. Open the oil filler cap and with a bright flashlight check for smoke/thick vapors coming out of it. This would mean your rings are shot, but I'd test this after you swap the turbo to ensure you aren't seeing issues from the turbo itself still.
You're in a very VERY similar situation as when I got my bugeye. I know the feeling and I feel somewhat obligated to help.