Took a look at a very nice 92 300D 2.5 Turbo today. 284,000 miles.. exceptionally maintained.

Owner says suddenly the car started smoking heavily. They took it to a local shop which pulled the valve cover and said nothing was wrong with the valvetrain.. must be a head or lower engine problem.

Upon startup it gives off a very nice stream of grey smoke which smells like burning oil - not coolant. The coolant tank is clean with no oil deposits. The dipstick shows no signs of water in the oil.

I took it only up and down thier driveway and the smoke from just that literally fogged out the neighborhood.. it was unbearable. The car also had little power. After that I noticed RAW OIL dripping out of the tailpipe and making a small puddle.

Needless to say the engine needs some major work.. any ideas on what it needs? What do you think this car is worth? Is it worth finding a good used 2.5 engine to put in?