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$22k for a C2 Cab, what a deal!
Is the oil is on the heat exchanger or on the muffler?
Take off the sound dampening (i.e. heat restricting) fiberglass pan to see if you can see where it is oily. Also shine a light into the fan shroud to see if the top of the cylinders are oily. Check the rubber hoses on the heat exch. If oil drips inside them, you'll get a lot of smoke.
The right side has the filler cap, filter and breather hose. It's easy to spill a little oil topping it off, removing the filter, or if you have a loose or punctured breather hose. Since there is smoke, it's probably dripping from spilling into the sheet metal pan next to your valve covers (filter and fill pipe would be my prime suspects, and a loose valve cover/bad gasket is a close 3rd place). In fourth place is a bunch of thing we don't want to get into, big $$$$$. If it was overfilled, the oil tank has a pop valve on top, but you would see oil in the wheel well, no where near the hot stuff.
The updates on my 964 are a huge mystery, too. I've put 130,000+ miles on my '90 and previous owners put 50k. I don't worry about the flywheel or the heads. If I was you, I'd try to enjoy the machine rather than worry about it. I'll have my engine/drive train rebuilt in a few years, and do any modifications/updates then, if needed at all.
If your clutch is smooth and doesn't slip, you should get many more 1000 miles on it. Mine had a rock hard clutch for the first from 50k to 125k miles. I broke it shifting from 4th into 3rd when I thought I was going into 5th. My mechanic said the flywheel was an updated one and still in good shape. 60k miles later, no problems (that flywheel has at least 130k on it if not 180k). The spline was dirty and all the back-resistance weakend the hub, not to mention the 100+ ft-lbs of torque in a stupid upshift which was really a downshift. Other than that, it would have probably lasted a lot longer.
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