Originally Posted by Superluminal

Oil can burn white smoke too. The blue is only seen when the right amount of light penetrates the smoke cloud. 10% ethanol has been in pretty much every gas station pump for quite some time now. This won't effect anything other than giving you a bit worse gas mileage since ethanol burns twice as fast as gasoline.

Your problem most likely lies with the turbo seal. Does it smoke only at idle and not under acceleration? If so that should tell you right there that the problem is with the turbo seal. This is because a bad turbo seal usually has a slow leak, which is enough to accumulate at idle and produce smoke, but not enough to blow smoke out under heavy acceleration. If it were the valves you would get smoke on and off the throttle. If it were the rings you'd get smoke more on the throttle than off. Both of these problems usually hinder the performance somewhat, due to the compression and valve seat being lower than factory specs.

Take off your turbo plumbing and see if there is any oil in your hotpipe and downpipe. Check the little things before tearing everything apart. Good luck.