Lots of smoke can be several things, but if the car starts well cold, gets good milage, and doesn't use oil, the most likely are incorrect injection timing, a stuck injection timer, too much fuel, or bad injectors.

Don't take the governor apart on the injection pump -- it is fairly easy to get it un-connected from the pump rack, and when you start the car the engine will run away and throw a rod unless you very quickly loosen all the injector cap nuts -- there is enough fuel in the pump to destroy the engine.

I would check the chain stretch -- if it is very worn, you injection timing will be late and you will have excessive smoke and low power (the current state of the Volvo). It isn't too hard to get a new chain in (search related posts).

Peter

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1972 220D ?? miles
1988 300E 200,012
1987 300D Turbo killed 9/25/07, 275,000 miles
1985 Volvo 740 GLE Turobodiesel 218,000
1972 280 SE 4.5 165, 000 - It runs!