Ok so here is the way I see it.
You bought a conventional boiler for price. Did you buy it before or after NY put in it's rules on OWBs?
Was the boiler grandfathered by those rules?
This is going to sound as if I'm bashing you or the dealer, it's not meant to!
Conventional boiler installations should always be given extra care in not aggravating neighbors, 100 feet is not nearly enough space for the emissions to dissipate before reaching the neighbor! This should have been discussed by your dealer, if it wasn't, then shame on the dealer! If it was and you decided to go ahead and break the rules then you learned a lesson that not only cost you wasted money but also a relationship with your neighbor! I suggest that you try and work on that relationship as well as put yourself in his position, who would want the neighbors smoke rolling through the yard when they are lugging in groceries?
Fixing the problem.
First, let's have a talk with DEC and the neighbor, will an EPA approved stove satisfy them both?
If so then there are several brands to choose from, personally I would be looking hard at HeatMasters G series as it is the cleanest OWB on the market and should satisfy both the DEC and the neighbor.
They are a machine and still have times that they are not going to operate perfectly so caution as well as traing on proper installation and operation will need to be addressed, this should be done with the dealer.
You are not alone with the problems you are now facing, many folks have been hoodwinked into buying an illegal unit over the internet and ALL the responsibilities fall on the home owner, now it's to late!
Indoor units placed outside in a shed.
Another bad idea, allow me to explain, first the indoor units typically are not large enough to give the desired burn times of 12 hours or more and typically try to make up for the small firebox by adding extra thermal storage, this takes multiple loadings during the day in order to heat up the storage tank and get through the night, lots of extra investment in plumbing and insolation and most important is the safety factor.
Safety, almost every indoor unit I have ever seen is a pressurized boiler, pressurized boilers should never be placed outside as they require a non powered dump zone that will dissipate a minimum of 20% of it's rated BTU capacity without power, think of it this way, if you have a raging fire when you fill up in the evening at 8 PM and go inside to bed, at 9 PM the power goes out and you don't realize it, the circs no longer can move that heat, it builds in the tank and creates steam, if the relief valves don't pop off and release the pressure then you have a steam bomb in your shed, if they do pop, you have a mess on the floor, diluted anti freeze and perhaps a fried circ. there is only one way to be safe with a boiler installed outside and that is with a non pressurized unit, yes backup generators, inverters with battery backup can be used but remember, they are only as good as the guy serviceing them.
I personally enjoy a good discussion with town or state officials as well as non wood burning neighbors so if you would like for me to get involved, feel free to give me a call, if you are in the right area of NY, I may have a nearby dealer that can help as well.