The oil in the exhaust may be from the oil injection tank. Check the tank and make sure it's got 2 stroke injector oil in it. Sometimes the injector system leaks oil into the engine and out the exhaust if the bike was stored for a long time.
If it does have such an injector system, use straight gasoline, not pre mix.
This would cause all the smoking you saw. IMO you will need to run the engine for at least 20 minutes before all the oil is burned off.
Because the engine and crankcase is saturated with oil, expect it to oil foul the spark plug a few times in that 20 minutes.
So, try changing the spark plug with a new one. If/when it oil fouls again, remove it and clean it up, install it and try again.