I think blue smoke indicates oil getting burned... does it also let out a puff of smoke between shifts? You might look into valve guide seals.

If you plan on keeping the car, upgrade the glowplug system to a parallel style. This is amazingly simple with the 220d gorilla knob... just replace the glow element in the salt-shaker with some solid copper romex (12 or 10 guage?), replace the plugs with the correct parallel versions, and put heavy guage wire between the plugs instead of the rigid resistive elements. Also, remove the GND strap from the final plug at the front of the engine. This is a sub-$100 upgrade that will make starting quite a bit easier and reduce warm up times. No relay is required.

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1985 MBZ 300DT
1969 MBZ 220d
1984 MBZ 300TDT
1981 VW Vanagon