Driving around in the bypass mode should not do any damage, the engine is retarding timing and bypassing boost. I had the same problem for months before I changed the knock sensor, which cured the problem. The part is 142 bucks at Xterraparts.com, but you need to replace all of the intake manifold gaskets as well, I believe there were 4 of them. You also have to drain the coolant. I think it took me 6-7 hours.