Thank you for great replies!
I have bought the car last year and it shows 99,000 Km on gauge, but not sure how many times it has rolled back. From clean interior and no ripped seats my guess is that its under 200km.
In regards to engine swap, I would like it to be a Mercedes engine again. Maybe a newer engine from 80's.
Oil drips from exhaust tip. Not around the engine it self. So my guess was that piston rings could be worn and allow engine oil travel through exhaust.
The smoke does smell rich in fuel so sure the injectors should have a roll here.
I am just beginning the process and have not touched anything yet other than new oil change with mixture of Engine Restorer and Lubricant before new oil change. The oil actually started to spit out from exhaust tip after I changed oil (W10-30) and let it run for a while and I revd it up multiple times. Goal was to flush the engine prior to new oil change. I does feel a bit less black smoke, but still a lot!
I will have to perform the tests you mentioned... i have never done those tests myself, so I will have to study abit to learn first.
Any tips on how to perform compression/leak tests will be greatly appreciated.