The valve seals would have to be *REALLY* gone to be burning oil from the valve guides. You could have some oil slobbering from the turbo too.

Doubtful that it's the injection pump. With poor compression on one cylinder, you're always going to have power problems and poor idle quality. The injection pump can be 100% perfect and the engine will still run like crap and smoke with compression issues.

Shops jump to the injection pump when they're clueless, lazy, see a gullible customer, or any combination of the above. As little as a 50PSI difference in compression between cylinders is enough to cause a rough/lopey idle. The fewer the cylinders the engine has, the more profound the difference will be.

__________________
Current stable:
1995 E320 149K (Nancy)
1983 500SL 120K (SLoL)

Black Sheep:
1985 524TD 167K (TotalDumpster™)

Gone but not forgotten:
1986 300SDL (RIP)
1991 350SD
1991 560SEL
1990 560SEL
1986 500SEL Euro (Rusted to nothing at 47K!)