running ruff and backfiring

Ok where to start.
I've been working on my 71 scamp for almost 2 years now, just updating things in hopes to make it some what reliable. So here's the break down, its got a 1980 318 with 360 heads not sure on cam probably a stock 360 but I'm not sure I bought it this way and the guy didn't know what it had in it. So far I've switch to fitech efi, msd box, msd dis., msd coil, msd wires, and a 76mm turbo. I got the car far enough along to start driving and find any other issues I might find and fix. There have been a few. So all is going well, the turbo system is working really well and so is the fitech at controlling afr. I was having some decel backfiring and wanted to do some adjustment in the fitech to get that to go away. So took it out a few Saturday's ago and doing some pulls and adjusting the decel in the fitech and it seemed to be helping with the backfiring when letting off the throttle after a pull. Then a few minutes later the car started to hesitate a little, then progressively get worse where it was backfiring with just a small touch of the gas. Now at idle if I rev the engine it will start backfiring. I pulled the timing cover just to make sure I didn't skip a tooth and all is well there. I did a cold compression test and all cylinders where fairly close in numbers to each other. My fitech was giving a O2 sensor fault, the first time I drove it my O2 wire fell down and the connector layed on the exhaust and melted a little but it didn't seem to effect how it ran and the fitech's ability to adjust the afr, but I went ahead and ordered a new O2 and connector and redid that with no effect. And the crappy part is it was running strong for the first few week, my brother was coming up for work training and I wanted to give him a ride cause he is always talking trash about his c4 vette being faster and the weekend before he was it is when it started running bad. Any help would be great.
Im not familiar with some terminology in your post, but for engine without turbo, backfire often cause by ignition timing. I would try to adjust timing first.