Retrofitting an internal combustion engine (ICE) dynamometer test bench for electric motor testing introduces significant measurement and control challenges. The two modes differ fundamentally in torque dynamics, communication protocols, and energy flow characteristics. This study presents a dual-mode measurement and control system for a retrofitted 250 kW test bench. The system retains ICE testing capability while adding motor testing through a shared LabVIEW interface. Three key technical problems are addressed: (i) a cross-mode PID controller with gain scheduling and bumpless mode switching; (ii) a wavelet-based dual-sensor torque fusion method using complementary filtering at a 50 Hz crossover frequency; and (iii) active front end (AFE) energy feedback optimization with quadrant-dependent DC bus voltage setpoints. Validation was performed on an 80 kW (240 kW peak) interior permanent magnet synchronous motor (IPMSM) across 823 operating points. The system achieved a peak system efficiency of 94.88%. Energy recovery efficiency improved from 58% to 82% through AFE parameter optimization. The proposed methodology offers a cost-effective template for extending existing ICE test infrastructure to support electric vehicle powertrain development.