Yep, that turbo is in pretty bad shape! One thing that tends to cause that, is either no air filter, or a hole elsewhere in the intake.
I've got a 1997 Ford F350 that I bought a few months ago with the 7.3 powerstroke in it. I took the intake tube off of the turbo and this is what I saw.
What I discovered was that the air filter was almost completely clogged, and there was a big tear in the rubber intake tube. So what happened, is dust got sucked through that big tear, and then mixed with the oil coming into the intake from the crankcase. And then accumulated on the walls of the inside of the intake tube as an oily muddy mess, and after a while, chunks of oily dirt broke off and would be sucked into the fins of the turbo, and caused all the damage to the fins.
I learned how incredibly important it is to make sure the intake tubes are completely air tight. I always knew of the dangers of sucking dirt and things into the intake, but I didn't quite realize the potential for it to build up with the oil, and eventually become a big chunk that could do so much more damage!
So, this truck has a new turbo now.
