Oygen sensor and fuel pressure regulator issues
 

1991 740 Turbo
199750 miles

I have been only getting around 12-14 miles since I got this car.

First question:
I pulled OBDI codes today.

121 Signal to/from Mass Air Flow sensor faulty
232: Self-adjusting oxygen sensor (lambda sond) not operating
322: Hot wire "burn-off cleaning" in Mass Air Flow sensor not operating
241 EGR system faulty

I put a brand new oxygen sensor two months ago and can't believe it is not working. Could it be that the wiring might be faulty?

Second question:
Given that when I dab the throttle, the car hesitates momentarily, I was told that the fuel pressure regulator could be busted. Today before I started the car, I pulled the vac line off of it and smelled slight gas from the FPR. After I started the car, I pulled the vac line off the FPR again and did not smell any gas and idle did not change at all! If the idle stay same, the diaphragm inside the FPR must have been punctured and gas should be rupturing. I don't understand why I didn't see gas flowing out when I pulled the line off. Does any one understand this situation?

Did you erase all the codes a few months back when you replaced the O2 sensor? If not, erase them now and drive a few days to see which come back. It's quite common for new owners to chase ghost codes set a year ago. Does not differentiate between current and historical codes...you must erase them and see which come back.
Odds are there is nothing wrong w/ your fuel pressure regulator. I'd be more inclined to start cleaning vacuum nipples on the intake manifold, removing the throttle body and cleaning it spotless, replace the tb gasket, reset the throttle position switch and start replacing every single vacuum hose under the hood. It's a turbo; the vac hoses pull not only neg pressure but positive pressure when in boost. This double duty, combined w/ the extra heat from the turbo...really do a number.