Okay, I went over there and screwed around with it just now. There was no water in the oil any of the several times I checked it both before and after running it. The leak is not coming from the water pump, thermostat housing, or the freeze plug at the back. I cannot see exactly where, because too much stuff is in the way, but it is coming from somewhere near the rear of the engine, on the drivers side. It is flowing down the block and falling onto the exhaust manifold. Apparently the engine never did overheat. The smoke just came from the water leak hitting the exhaust. I ran it for about half an hour, both idleing at on the gas, and the temp never got hot. You could watch the gauge go up and down as the thermostat opens and closes just like normal, it was just smoking from the ehaust manifold. I presume this is a head gasket, correct? The vehicle is in the hands of the original owner, who is a very reliable source.
So, how hard is it to change a head gasket? Any tips? What does a head gasket cost?