Is this your first diesel? The reason I ask, is to help in sorting things out.
We're working with strictly fuel and compression here and from your explanation of puffs of grey smoke, the "compression/heat" side of things is suspect.
Glow plugs- What kind of indication do you get from the glow plug light? Do you let the glow plugs go through their complete cycle? To do this, turn the key to position#2 and wait till you hear the click of the glow plug relay before swithing to the #3 start position. (You will also notice the warning lights brighten at the same time.) What do you get trying this method?
Report back and if it still won't start we can sort things from there.
