I smell exhaust in side the car, when I have the windows down it's really bad, but when up it's half as much. Also this is when i'm driving on the highway. My exhaust comes strait out and is 2 inch behind the bumper?

Sounds like you have a leak. Is this a sedan/coupe or a wagon you have? If it's the latter, it's possible that you don't have an exhaust leak, but instead are pulling in exhaust around the rear window from a bad window seal. Otherwise, you can probably find soot marks around a leak in the exhaust system.

__________________
Whoever said there's nothing more expensive than a cheap Mercedes never had a cheap Jaguar.

83 300D Turbo with manual conversion, early W126 vented front rotors and H4 headlights 400,xxx miles
08 Suzuki GSX-R600 M4 Slip-on 22,xxx miles
88 Jaguar XJS V12 94,xxx miles. Work in progress.

I have the 300 sd. I looked under the hood and back by the fire wall there is alot of soot but I felt the flex pipe and didn't feel any holes

If you have soot in the engine bay you have a leak somewhere. You might try going out at night with a flash light, and while the engine is running look around. It might make the smoke show up a little more.

__________________

I'll add a note to this: The LED bluish-white flashlights seem to reflect the smoke a lot better than traditional bulb flashlights (you'll notice this when a nice big luxury SUV with HID lights is tailing you and you stomp on the gas ). Therefore if you do this test, I recommend using an LED flashlight if you've got one, but either would do.

__________________
TC
Current stable:
- 2004 Mazda RALLYWANKEL
- 2007 Saturn sky redline
- 2004 Explorer...under surgery.

Past: 135i, GTI, 300E, 300SD, 300SD, Stealth