I don't think the metformin is doing anything bad to you. The neuropathy can only be helped by lowering the blood sugar. I don't know about
exercise. Maybe someone can help out here with more information about
It's true that high blood sugar over a period of time will damage nerves (neuropathy) and vision (retinopathy) but it probably varies from person to person about how high the blood sugar would have to be and for how long.
The bottom line is keeping the blood sugar levels near normal. Since the metformin isn't doing this by itself and you've cut out carbs, then you need other drugs. The question is if you are actually a type 1 now. If you are, you would need insulin but they need to do some tests to determine if you are type 1 or type 2.
The red flag in your case from the beginning is your great loss of weight.
All this: weight loss, blood sugar readings, journal of what you're eating, neuropathy, etc. should be documented and shown to a doctor who takes his patients seriously.
I have all my fingers crossed for you for this to be resolved once and for all with a new doctor!