tuning it with the exact setup would be stupid if your going to change it because you will just need to tune it again once your all done

 

Sounds to me like you two should take a walk and count to ten.

It looks to me like your manifold is the problem. You should be able to re-use that downpipe and exhaust, but you need to replace that silly flange adapter that someone fabbed up while they were learning to weld, and just put the flange that attaches to the hot side of the turbo on the downpipe. After that, the turbo should clear the hood and you get to keep the nice big turbo. Here's the adapter flange I'm talking about:


If not, get some pictures of it with a tape measure, so we can see exactly where the clearance issues are. Pull the exhaust manifold so we can see what it actually looks like, and measure the turbo dimensions.