I bet the color is a bluish white. But that is still unburned diesel fuel.

It could be a weak glow plug(s).

What oil are you using? It is supposed to be a synthetic for your 98. According to MB, it has to be CG-4 or higher so Mobile 1 actually does not meet that requirement. That leaves only a few oil options in the US and many dealers use the wrong oil (oil that does not meet the MB requirement).