Need help!! 95 gt

My friend has a 95 gt auto. the mods just recently are aode rebulit w/trans-go shift kit, 2800 stall and 373's. The trans only has 3 gears but thats a different story. i believe the guy put a c-4 in it but the problem is it runs horrible. Even w/ the above mods. So we did a full tune up - plugs, wires, cap and rotor everything. We even put new dynomax ultra flow welded's on b/c the 40's were rusted threw. after this it runs a little better but not like it should. The car has 145,xxx on the clock and is/was not taken care of but it's decent. okay enough background, the axle housing is leaking in the rear and its blowing out black smoke when reved over say 2500. Is the piston rings fried? Only noticed from one person once or twice about seeing smoke before the muff intall. Mind u that the flow tubes, and the 40 series were rusted through so that may have something to do with not seeing the smoke b/c its all not going out the tails. sorry for the long post but this car is supposed to run better then this. He gets killed by 2 cars by a stock 98 gt 5-speed w/exhaust. Maybe a rebuild is the best to do, that what i suggested.
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