The first thing to do is set it into a good state of tune, put it back to where it should be, so, before you start f**king about with things you don't understand then check/set the following or get them done proffesionally.
Lots of engines have been written off as knackered due to simple service operations that have not been carried out.
Simple service
Oil and filter change, good quality oil filter (not Unipart or Fram!!) and refil with 15w40 mineral oil, you don't need anything fancy with these engines.
Replace the air filter and make sure the inlet tract to the turbo is un broken and clear of blockages.
Replace the fuel filter and bleed it properly to expel any air, you can either prime it with fresh Diesel (messy) or connect all the pipes up except the outlet to the pump and then using a vacuum pump draw fuel from the tank into the filter (not messy)
Tappets
Set the tappets, yes they need setting and no they aren't hydraulic as some people think, this is the single most over looked service item on these engines and generally the cause of mis diagnosed engine replacements. They are of the bucket and shim veriety so the idea is you set the engine to TDC on which ever cylinder you are setting and compress the buckets with the appropriate tool and lift the shim out and replacing it with the correct size shim to set the gap between the shim and the cam.
The spec is as follows
Inlet .2mm to .3mm
Exhaust .4mm to .5mm
They are to be set with the engine stinking hot and the rocket cover gasket is to be replaced afterwards or they leak, but leave it off for the mean time.
Cam timing
Set engine to TDC via the inspection hole in the bell housing, there are 3 marks in there, you only need the middle one, so..
You have an uppy one, an inny one and then an uppy one again, it's the inny one in the middle thats the TDC mark.
rather like this... ----^-v-^----
Then, remove the rocker cover and with your special tool that you bought before you started place it into the back of the cam to check that the crank and cam are perfectly in time.
The timing peg should also fit into the injection pump sprocket and lock securely into the injection pump mounting bracket.
If you are in any doubt about your cambelt you need to change it along with the tensioner.
The cam belt sprocket is of the "wedge mated" design, meaning there is no woodruff key and it is infinatley adjustable.
If your cam timing is out and you need to reposition the cam sprocket in relation to the cam then slacken the nut and tap the pulley with a punch from the rear through the hole in the cam belt cover to crack it off.
Pump timing
Again, another critical over looked service item, while you have the rocker cover and cam belt covers off you might as well check/set the pump timing.
Not rocket science either, but you need some special tools in the form of a DTI and pump timing adapter.
While the engine is at TDC on number one install the pump timing adapter and then fit the DTI with a couple of mm of preload.
Wind the engine backwards (without the timing peg in the pulley and the setting bar in the back of the cam!!) until the needle on the DTI stops moving.
Zero the DTI
Wind the engine back up to TDC.
Measure off the timing reading.
factory setting is .9mm of lift at TDC although it is generally regarded that 1mm of lift is best for performance, cold starting, fuel economy and lower EGT's.
If the reading is out of spec you need to undo the bolts securing the injection pump and move it to a position where you obtain the correct readings.
You need to check and double check that the timing is correct before you nip up the bolts.
Exhaust manifold.
Fairly simple this one, they warp.
Usually resulting in a leak from number 4 gasket.
Remedy, remove the exhaust, the turbo, the engine mounting and remove the manifold and either fit a new one (expensive) or have yours resurfaced (not as expensive)
Refit with new gaskets and new self locking nuts, make sure that the thick stainless washers are in place also as they are an important part of the design (manifold is designed to move on the mounting studs as it warms up hence some holes being bigger than the others)
Remember the factory self locking nuts have 12mm heads so you can get a socket between the manifold and the nut, use 13mm headed ones and you may struggle.
Turbo.
Loads of good turbos have been written off as scrap due to mis diagnosis.
Most of the time it's because people see a bit of oil in them and then proceed to have kittens. most of this oil is what has come from the engine breather that joins the turbo air feed pipe from the air box and is harmless, if it bothers you clean it out.
There is always an amount of play in the turbo shaft, part of the design as the shaft is designed to float in oil.
For referance the turbo mounts to the manifold with no gasket, so don't go hunting around the floor for the one that fell out, because it didn't, there isn't one and don't be tempted to "seal" the joint with exhaust paste either as what usually happens is that when the manifold to turbo bolts are nipped up that paste is squeezed out into the port and with exhaust gas flow these baked bits of paste get dislodged and damage the turbo vanes, so don't do it!!
the funny bolts are 12mm, 12 point, or 12mm Bi hex socket as some call them.
Does it still smoke?
Cold starting.
The Cold start lever (no, it's not a f*ckin' choke!)
At the side of the steering column is a little lever, if you pull this lever it advances your injection pump timing by 2 degrees or so to aid cold starting and to enable the engine to idle smoothly while it is cold.
You should not need this function if your engine is in fine fettle or the temps are around or below freezing.
The mechanism works by rotating the guts of the injection pump a tad to advance the pump timing, but it only works upto about 2000rpm until dynamic injection advance takes over, so, basically leaving the lever out all the time will NOT give any performance gains.
The levers are a twat to pull out without the engine running.
So, cold morning, jump in, go for glow plugs as glow plug light goes out gently pull on the lever and crank the engine, you will find that the lever comes out easier as the engine turns. pull the lever out enough to obtain a smooth idle.
Push it back in when you can.
Glow plugs
Why is it that when ever anyone gets any starting problems they go straight for the glow plugs?
Yes they fail, but not as often as people think.
To check them...
Either, remove the injectors and physically watch them.
Remove the buzz bar and using a multimeter check the resistances, or just check for an open circuit as all they basically are is a coil of wire (hence the symbol on your dash)
The glowplug system is controlled by a temperature sensor, so, the colder it is the longer they work for, if the connectors or wiring are in poor shape this will have a detremental effect on how the system performs so check the wiring.
Once the engine warms up the sensor will tell the control relay the engine temp and the relay won't energise the plugs.
There are 3 stages of "Glow"
Pre glow, the bit you see when the light is on.
During glow, they are still powered while cranking.
post glow, they still work once the engine has fired for unto a minute to maintain a smooth idle.
Changing the glow plugs can be a bit fiddly, ratchet spanners are your friend here.
The nuts on the buzz bar are 8mm, or they should be, the glowplugs themselves are 12mm.
Still smoking?
Injectors.
Chances are that if your still smoking after that lot then your injectors or pump are worn.
injectors are easy enough to check with a "Pot" or "Pop" tester.
They get removed, attached to a machine and the spray pattern and opening pressure are checked.
If they are on the piss new nozzles can be fitted and set to the right pressure by means of a load of different size shims to set the preload on the internal spring.
Injectors should alwats be refitted with brand new washers as they collapse to form a seal to protect the nozzle, re-use the washers and your in for trouble with damaged injector nozzles.
Worn pump.
Sounds like it.
White/blue smoke on a morning? smells of Diesel? runs like shit? sorts itself out when warm?
Dig deep boyo, looks like your pumps f**ked!