Can we get the first time home buyers tax credit if we purchased the home from my EX step-father?

Your ex stop-father is not your relative after divorce.
A related person includes your spouse, ancestors (parents, grandparents, etc), or linear descendants (children, grandchildren, etc.).

And was it a "real" purchase, did you get a mortgage and was the deed transferred.

Yes we have a mortgage. $165,000 and yes the deed was transferred

Then it is a legal sale and, under current rules, eligible for the credit.