The reason your friends' car hits fuel cut @ 17psi is this: when the turbo is forcing ~400cfm of air into your motor, your 450cc injectors cannot compensate- even if they stay open 99% of the time, they cannot bring the A/F ratio back to 12:1.

Keep the boost down to about 15psi and you'll have no further problems. If your friend simply MUST crank the boost up to 17-20 psi, he MUST do work to his fuel system.