This is true, more testosterone does give you better muscle building ability, genetics will have the final say how much muscle you put on.
Too little or too much of anything isn't healthy. Taking massive amounts of Test comes with other risks, like thicker blood -> thicker blood, more pressure in the pipes.
Test may or may not be related to your prostate problems. It could just be a urinary tract infection.
Also your prostate may not functioning as efficiently as when you were younger, so excessive androgens can aggravate the prostate.