He is saying that only 1/3 of the total power is converted to usefull work (200hp in this case). Thus, the engine has a 600hp potential (100 % efficiency). Yes, this is a broad generalization but it is great in that it easily shows where this power is coming from to power a turbo, etc. Also, he says at the beginning of the "Maximum Boost" that is isn't an engineering text--rather a book to show people how turbos work and to educate (hence the simplified example).
Soren Faaborg Phuong on the Amish < GotRice_ > they get all horny when I show them electronic stuff