Gib, Dale's advise is pretty accurate! A few comments and clarifications. If the valve has been out of adjustment for extended periods, it may not be build up that prevents an adjustment from fixing it, but rather erosion from the combustion gases passing through the "gap". Either way, a valve job should be able to fix this.
My only other recommendation is to have a qualified mechanic check out the motor. You do not want to throw money away doing a head job only to find out you have bad rings as well. There is a considerable difference in the cost of these two repairs. The "smoke" coming out the intake certainly indicates that there is a valve problem, but you may have a piston ring problem as well. With only one bad cylinder, the engine should still start. Bad compression from worn rings could be the reason, as well as pump timing, glow plugs, etc. A compression test will do you wonders. Also, if you can tell the mechanic about oil consumption, this will be another useful clue, as worn rings usually results in increased oil consumption as well.
87 300TD, 160,000 miles
72 280SEL 4.5, 250,000 miles