I am really pretty confused about the whole MBC setting thing but here's what it looks like on my Defi Dseries guage:

1st and 2nd are really too short to look at the boost guage long enough. 3rd gear punch spikes to 20-20.5, and tapers to about ~17.5 after 5500. 4th gear punch spikes to about 20 and settles down to about ~18.75 or so. 5th gear holds 20-21.

Is this OK?

I can't seem to get a straight answer if this is too high or too low?

 

Sounds just about right. What boost are you trying to run?

 

I just want to run 20psi. Is that much tapering in 3rd gear normal?

 

That sounds correct to me, the taper in boost is bound to happen some, 3 pounds isn't that much

 

Where did you tap your MBC in at? I think this is pretty common when tapping to the turbo outlet. Some people say tapping at the BOV line yields less taper but I haven't tried it.

 

yup mine is tapped at the turbo outlet. I have not tried it at the BOV.

Another question: should I rely on 5th gear readings for setting the boost controller? I'm getting the highest readings in that gear.

 

I usually use 5th to get the max boost I want. If I'm just going to be around town I'll set it in 3rd or 4th.

 

How far away is the actual MBC unit from the wategate?
Tee the BOV/CBV line like this;
http://www.evotuners.net/forums/showthread.php?t=335
Solid 21 psi to 7000 from a $50 MBC.
Set the boost in 3rd gear, WOT.