I agree that its probably not wise economically to deal with low compression on that car if it has over 150k. It can still be a good car, just not economical.
BTW diesels do not blow blue smoke from burning oil. Diesels will run on oil. Blue smoke comes from incomplete or inefficient combustion. Causes include: compression, fuel delivery (injectors), timing. Anything that approaches a missfire.
There was a certain amount of discussion in the x66 thread about diesels and carbon. I have seen carbon freeze the rings on many a low mileage motor. Before throwing the beast away, I would do an intensive diesel decarboning plan. There are a number of additives that may do it: Redline (is the one we use) and Techron are two I know about.
Bosch Master, ASE Master, L1
33 years MB technician