I just bought a '98 A4 1.8T Quattro Tiptronic with 60,000 miles on it, but in good condition. I already upgrated the chip (adds 60hp and 100lbs of Torque) and removed the resonator and muffler, which I replaced with a 2.5" pipe and a straight through muffler. I felt a difference after the chip, but some how when I swapped the muffler and resonator I feel like I lost power. I haven't brought it to the track yet, but I lost against a (on the road) '00 BMW 328i and a '00 Civic Si, this seems wrong doesn't it??
I also had some one tell me. because of the high mileage, the deverter valve is worn out, and loses pressure under high boost, could that little thing really make that much of a difference (I was going to switch it to a "Forge" anyways down the line)??....Or is my turbo shot? (and yes i know the car has all wheel drive and an automatic, thus it's slower, but with my upgrades I should be able to keep with or beat a stock 328i with auto, shouldn't I???
Thanks for any respons...

You will lose some low-end torque with your new exhaust setup, but once the turbo kicks in it should be all gains.

I would suggest making sure you are getting full boost. When I added my Borla to my chipped Tip 99.5 Avant 1.8t, I noticed a big increase in power, esp. between 4k and 6k rpm's.

Your diverter valve could well be leaking boost. I replaced mine with a Bailey valve. Do some research here and you'll get all the answers you need. Also, a good boost gauge wouldn't hurt either.