I had this exact same issue.

1. Check to see all cylinders are getting spark by removing the lead and putting a spare plug in and try cranking
2. Your plugs by now are rooted. Swap them out
3. Dump your catch can and clean it out as well as then hoses for where it got flooded
4. Check your relays and fuses in engine bay. I tested each one by one for open and close relay etc. Check the fuel pump or injector relay also.
5. The cranking surge thing is electrical. You tapped into a wire in engine bay could be that. Try adding earths from engine to chassis.
6. If you Did have spark and swapped the plugs and able to start it. Add engine flush but do not rev. Dump the oil and change filter.
7. Carby clean the throttle body after you added new oil and filter. Rev it and spray it.

That should help.

But the starting and power loss is electrical.

I wasted 6 days in a row and went back to basics then solved my own problem.

Hi,
 
All cylinders are getting spark. The car actually starts and drives. Under throttle it seems to drive fine. however in lower RPM I suspect its over fuelling. The catch can is clean however could be due to the setup I run wit the catch can.
The crank surge is more the rings scraping the bores. Basically because the oil was a 50/50 mix of fuel and oil and the cars over fueling so much it is washing the cylinder bores clean of oil and diluted the oil to be incredibly thin. It like starting the car with petrol in the sump instead of oil.
The oil/fuel leak is isolated to the turbo seal so it hasn't made its way to the throttle body or intercooler even.
I'll run some diagnostics to see if I can work out what is causing the over fueling. However it has another issue in the coil or igniter needs replacing. So I'll swap both out and go from there. Got a lot of tests to do at the moment.

Okay if ur igniter is dead let me know. I have spare one as I did coil on plug so took mine out.

I PM'd you but didn't hear back Blue2. I ordered in a new coil and ignitor module anyway.
Refilled the car with new oil today and started this morning. All seems good, car was idling fine. So I did a compression test, however the engine was still relatively cold as I had only run it and reved it for a few minutes.
No oil is coming out of the turbo seal anymore, must have just gone too thin.
The compression test of a fairly cold motor came back as 125psi on two cylinders and 130psi on two cylinders so all seems alright. If it was run when hotter might have bumped it up a bit more, main thing is its all even, so nothings destroyed.
In a few weeks the new ignition parts will arrive so I just need to track and monitor what made it over fuel. I checked the plug colors a few weeks back when hot and all were orange/brown so it must be happening in the lower revs or idle, so I'm thinking the melted O2 sensor plug is at fault. Possibly crossed wired.

Did you try running it without the O2 sensor plugged in?

No, the problem is the connector on the O2 is completely melted so I will have to cut the wires to disconnect. I plan on cutting and rewiring with new plugs when I get some in. Might be a bit hard working out which wire is connecting where given the connector is badly melted.
I'll need to check if the car is over fuelling at low revs because the car seems fine. It starts fine, drives fine etc...Just need to keep an eye on the oil and see if the fuel is dumping in. Either that or get it to a mechanic with a dyno to check the air/fuel ratio properly. I go based on plug color currently to work out if rich or lean.

Sorry mate. Let me know if you still need it. Im in Sydney.

Where are you getting the plug for the o2 sensor from? Mine is partially melted. I am going to get another o2 sensor tomorrow but will have to cut and join. I cannot disconnect it but can still see the wiring colour.

Not a problem mate. I picked up an ignitor module from ebay for cheap, same with the coil.
As for the plug, I bought 4 pin connectors from ebay. Basically 5 water proof plugs for $5 delivered to Aus from HK.
If you O2 sensor is alright, I'd just change the connector over.
Do you have two white wires and two blue wires comming out of your O2 sensor. What color wires do they match up to on the other side of the plug? Is it blue to red and white to black?

I will have a look tomorrow and let you know. I know the harness going to the o2 sensor has 2 black, a brown and another coloured wire I think. 
 
Which link did you buy it from? Can you send it to me

Attached the link below.
 
http://www.ebay.com.au/itm/5-Kit-4-Pin-Way-Waterproof-Electrical-Wire-Connector-Plug-/321036979529?pt=LH_DefaultDomain_15&hash=item4abf4b8d49