This motor ran fine then all of a sudden this started?
Its most likely ignition or fuel.

Recheck your firing order.
Check ignition timing.
A merc Scan tool would be nice.
Whats your fuel pressure?


While holding the throttle at 2000rpm pull a plug wire
then put it back. See if you can get the backfire to stop out of that bank. See if you can narrow it down to what cylinders.

installed new injectors cap and rotor rechecked timing and codes none tach needel bounces at idle and engine surges at midd range engine speeds up from 2000 rpm to3000 but tach doesnt still back fires. runs fine no load above 3000 rpm doesnt with load

Yes it could!
If the drive oil monitor is not hooked up and one of the leads is grounded, or oil level is low, the engine will be in "Power Reduction Mode" which will limit revs by not firing injectors above a certain RPM (i think 2000).

Dave

Try unhooking the tach, i have had that problem before and it turned out to be a bad tach.

Did you ever get the problem fixed?