The backfire in your exhaust is definately because of too much fuel.. This happens due to the 12:1 fmu that you are using.
I assuming that you are still running your stock Cat ? If you are you should remove it, or whatever is left of it by now.. =)
I used to have the same problem... Every time i would hit boost in whatever gear and shift it would back fire and shoot flames out the exhaust..looks pretty cool though ...hehehe

As for your boost.. you will never be able to hit full boost in first gear because it is very short, and its not giving enough load... But you should be able to hit more than 1psi.. so check your Intercooler piping and be sure that its tight.. You could be leaking boost.