Blocking the EGR is a great way of preventing carbon buildup. You'll note on most failed heads that have burned VO in there lifetime, there is a lot of buildup of carbon on the back of the intake valves. This is a tribute to a working EGR and what effects it can have while recycling VO fumes in the intake tract.
To put this simply, we have seen the horror that the EGR causes on all newer diesels. Look up any pictures of clogged intakes. Those are typically pictures of people burning regular d2. When you mix in a deposit forming fuel that VO inherently is, just think of the problems that are associated.
Rerouting the CCV to a catch can is also another great way of limiting deposits. Basically for the same reason as above.
Although I have taken precautions... I still am rather skeptical of extreme carbon buildup. There are many people that have still run function EGR systems and have surpassed 100k. Phil is one, and Chase is another, and I'm sure there not the only ones. It seems to me that if your doing your stuff right (not switching until operating temp, not switching till you've reached the desired fuel temp, and purging for at least 30 sec (GC) you really shouldn't have any problems.
Smoking out the back of your exhaust is a very bad thing!!! You are smoking due to unburned fuel and washing the cylinder walls with VO. Over time this will wear the cylinder walls and eventually make it to the rings where most people are having there problems (i.e burning oil, low compression, poor running engines) O yeah, this will become a source of your carbon buildup and eventually will ruin your engine.
I have a water/injection setup put on my car specifically for burning WVO. Since I am taking every precaution to deposits (even though I am still skeptical,) water/ injection is a great way to remove deposits (which is basically what you were doing Todd B.
***Where I believe the problem lies***
Timing, or should I say lack there of.... Our sophisticated IP's can be a real pain in the a** for us WVO'ers. The pump adjusts timing due to extreme fuel temps, which in our case is always when we are running VO. As vwcampin said, see my thread for more of an explanation but I have seen that the ECU is capable of pulling back timing 2-3 deg.
My timing on my car is mechanically set advanced, around 2 deg or so. Even with a mechanical advance, the ECU was still able to pull back timing to be a tad bit retarded at low RPM, low load conditions. With the fuel temp resistor in effect to essentially fool the ECU into thinking the wrong fuel temps, I was able to limit this to where I am happy. I never see less than a deg of advance on VO. The information complied from a variety of sources says advancing 2 deg on VO will be much better for combustion. (when your not burning the stuff completely, your causing deposits)
Another place of concern is the injectors and popping pressures. If pop pressures aren't within spec, atomization is hindered greatly. (the fuel is already thicker then diesel, even heated) I feel this needs to be monitored also, a great way of doing so is monitoring measuring block 13 on VAG COM. Or pulling the injectors out to see if they are to spec.
Both of these factors contribute to combustion. Both being extremely important.