My 1989 750iL engine with 150K miles has head problem. It has seriously smoke and far fail smog test. Other components are fine so far. Could anyone give me suggestion to fix it or replace the engine in a cheaper way? I live in San Francisco.

What color is the smoke?
White smoke is water being burned in the combustion chambers, and possibly leaking into the oil also.
Blue smoke is oil consumption.
Black smoke is too much fuel, like maybe a ruptured fuel pressure regulator or a faulty sensor causing a rich condition.

Need more info,
---TEX---