I agree with Ralph....be very careful who you let work on your car...sounds like you have a major issue there...never heard of oil blowing out the tailpipe....just tons of smoke...my car before it was fixed would blow clouds of smoke espcially when it was full of oil...in my case connecting rods 1 and 6 were bent causing extreme blowby.
I had a complete MB engine(without turbo) installed at the dealer...Complete with a 48/50 MB warranty. MB I was told had made modifications on this engine ...be very careful who you let do the work and make sure they use the latest available parts....one of the cases where I think going to a dealer may serve you well...but the bad new is(I assume you have no warranty coverage)its going to cost you somewhere in the 9-10K range....expect to pay about 7500-8500 for the motor(depending on what the dealer sets the $) and about 26 hours of shop labor..

good luck

Warren
1992 300SD 115K
Columbus Ohio
turner@greif.com