I hope that this information might help somebody else stranded in CA or other strict emissions states. After the above post I installed a new EGR valve just in case and serviced the air cleaner then went back for another test. The NOx just kept getting worse.(It was over 2000 now) I was ready to give up. That is when it occurred to me about how fuel air mixtures can influence temps and smog. I had a hunch that by reconnecting the pulse air system a lean condition was induced and that by cleaning the K&N a further lean condition was induced. This was aggravated by the fact that I had a fuel regulator installed it was dialed way down due to the rich conditions I was experiencing before. (I read somewhere of a guy with fuel pump trouble having the same condition.) I was at the dealership getting some service on another vehicle and picked the smog guys brain there and he concurred. He also gave me several trouble shooting tips. I went home, removed the fuel pressure regulator, and checked the whole system over one more time.
Monday morning I took the Jeep in and it passed!
Everything seems to have an effect on the smog system not just the smog parts themselves. Remember to check the engine and fuel components as well. Maybe this will save you a little money.