This is a challenging circuit but some of it looks familiar. The following is my interpretation of the circuit operation, some rhetorical questions and comments on troubleshooting.
Q2 is a triac (bilateral switch) that appears to have two functions when switched on. One, it sends a high current alarm to the processor, and two, it holds down the gate of Q1 to prevent it from switching on. Consider that initially Q2 is off. The MT1 terminal is at +28V via R32 which reverse biases D2 and D3. MT2 is fixed at ground potential. The OVERI line is pulled up to +5V via R18. Q2 gate is biased slightly positive by the +26V supply and the voltage divider made up of R31, R21, R20 and R23. The voltage across R23 depends upon the current through D5 and the Power + circuit. If this current becomes too high, increased voltage across R23 will raise the Q2 gate voltage enough to trigger Q2 on. When Q2 switches on, D2 and D3 are forward biased pulling the “OVERI” line low and holding Q1 gate near ground potential stopping Q1 from switching on. Once triggered, Q2 remains switched on until power is removed - even if the gate voltage drops below the trigger threshold.
I think the purpose of C15 coupling capacitor is to prevent the +26V via R1 from raising the gate voltage of Q1 and turning it on continuously. I'm curious though. If I understand correctly, you observed Q1 gate voltage rise until it was clamped by the zener (D4) and then it fell off to ground potential. If the gate of Q1 is truly shorted to its collector and emitter how is this possible? I would suggest taking a second look at this. I am not familiar with an insulated gate bipolar transistor, but could the initial gate voltage exceed the gate to emitter breakdown rating? I think the zener should prevent this, but what if it does not? Is C15 shorted?
You stated, “All the digital stuff seems to work even the voltage detection and current are displayed correctly( full 250V max voltage with a varying mA depending on the load I put). “ Is this a typo? If rectified voltage is 350V doesn't 250V output imply that the regulator might be working? What turns on the dc output? Is there a relay or a mechanical switch with bridged contacts? Is there a delayed turn-on circuit for the dc output that isn't working?
If you have not already done so, I would recommend some testing with Q1 removed from the circuit and before powering up. I would check C15, D7, C19, and the output of “Power +” for shorts or opens. I would then power up without Q1 installed and probe around with a voltmeter looking for abnormalities with terminal voltages. Something might stand out.
The purpose of Q3 is not clear to me, but I hope the other information is helpful and I wish you good luck in your repair project.