If you change the panning mode to 2 or 3, it follows the car perfectly so it should be all in focus and none of it blurred. As for the sparks, smoke and backfire, you need to just find the settings that work to capture them, a slightly longer shutter speed usually otherwise if it is too short it would just miss them. I'm not saying the photo mode is perfect or what you are doing is wrong, I was just throwing something into the ring that you might not have known. Hope it helps.
P.S. if you haven't already looked it up, there is a good camera guide on GTPlanet that goes through every setting in photo mode and gives you advice on how to take certain shots.