Almost sounds like it is suffering from both a leaking head gasket and valve stem seals. Easy to verify the head gasket if your local shop has a sniffer to detect hydrocarbons in the coolant - a quick, easy and accurate test, only takes a few seconds once at operating temperature.
I am basing this guess on your description of the smoke. While any engine is coming up to operating temps, it will emit liquid condensate through the exhaust as H2O is a byproduct. This is usually emitted in vapor form, due to the operating temperature, and therefore not usually seen (execpt on cool/cold mornings). Although 3-4 ounces for the short duration you say you ran the engine sounds a bit much.
Not what I would call "terminal", but could be that the engine had been overheated which may have warped the head.
73 280 SEL 4.5
[This message has been edited by MikeTangas (edited 11-01-2000).]