A 4Matic of this era that billows white smoke sounds like it has a leaking transfer case. With a transfer case leak, there is no loss of trans fluid from the transmission. Are you checking the trans dip stick and adding fluid there?

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07 E350 4Matic wagon, 06 S430 4Matic, 99 SLK 230
retired W210 (x3), W124, W126