For the smoke, bad turbo or valve stems. My money is on the turbo.
For the motor question, try checking the oil pan, the 7 bolt oil pan has a dip in it under the oil filter housing. The 6 bolt is flat, flywheel would be the sure-fire way though.
You can bolt the turbo right up, just keep the boost down until you can tune it. make sure to recirculate that BOV.


EDIT: ah beat me to it!