I see I never replied to this, so for the record:

The problem indeed turned out to be the valve stem seals. Whoever had last worked on the head had installed the cheapest aftermarket seals and they did not seal very well. The exhaust seals seemed to leak more than the intakes and, in addition to the smoking, was the cause of the external oil leak because the exhaust manifold was not properly torqued. Oil would leak through the exhaust valve stem seals into the exhaust ports and then seep between the head and the manifold and coat the right rear side of the block with a layer of oil.

The head gasket was in good condition and the head itself was OK except for some dings in the head and piston crown of the #2 cylinder -- sounds very much like what theref described in his #22 cracked head. I can't imagine what might have caused such damage.

In the end, I decided to upgrade to a later casting and picked up a #20 head with most of its bits and pieces from Sixto, who had had it on his '92 300SD that got rear-ended. I had a "light" valve job done and installed factory valve stem seals and a bunch of new gaskets. Made a $10 valve spring compressor from scrap metal and screws by modifying a design for a VW tool that was mentioned in a forum post several years ago.

The new head works great and the engine has stopped smoking and leaking. For what it's worth, by the time I got the head serviced (Paul's Empire Head, Santa Rosa, Calif.) and installed (including $140 in special tools) and replaced all of the missing/broken/damaged parts hidden under the turbocharger, I had spent $2,000. OTOH, the car is a lot more fun to drive since I can romp on the throttle without leaving behind a cloud of smoke.

Jeremy

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"Buster" in the '95

Our all-Diesel family
1996 E300D (W210) . .338,000 miles Wife's car
2005 E320 CDI . . 113,000 miles My car
Santa Rosa population 176,762 (2022)
Total. . . . . . . . . . . . 627,762
"Oh lord won't you buy me a Mercedes Benz."
-- Janis Joplin, October 1, 1970