I just purchased an 83 rabbit w/ a 1.6 TD out of a Jetta and when diving it home (halfway into a 2000 mile trip) I had some odd things happen. I was going up a fairly good sized hill, getting on it pretty hard (full throttle at just over 70MPH in 5th gear) and all the sudden lots of white smoke started puring out of the tailpipe I lost all boost/quite a bit of power and smelled something burning. Made it over the hill, pulled over and there was a little smoke coming from the front of the engine (opposite from turbo) that went away w/ in 15 seconds or so (car still running) and no more exhaust smoke. Then the car seemed OK. Limped it to the nearest truck stop to take a closer look. Check oil/coolant-everythings fine. Drive it a little further and it actually seems to be running better at lower engine speeds/lighter throttle, it just won't build much boost and I notice (more than before) black smoke coming out at higher throttle. Before it wouldn't go much past 8 PSI before dropping(which seems low, I think these things are supposed to go to 10-I assumed it was a faulty boost bleed valve or whatever it's called), now it's about 6, but only in 4th and 5th gears. If I try to accelerate hard in lower gears the boost gets to about 5 and then falls to 0 (this may be because the RPM's raise quicker in lower gears). On the highway I can pass people uphill just fine w/ partial throttle in 5th gear-it runs really well accelerating from 65 to 70 in those conditions(like I said it seems maybe even better than before), taking off from a standstill is a different story. Also, before, I never heard the turbo spooling up /down at all(something I was expecting to hear), now I can-faintly. You know-the cool '18 wheeler-accelerating' whistle.
Anyway, I haven't hit full throttle since, but I made it the remaining 800 miles w/o a single problem. No signs of oil in the coolant or vice versa. No more white smoke. MPG was down a bit though (but in different driving conditions, so I'm not sure how much). Just the turbo going out? Why the white smoke then? I have been using generous doses of fuel conditioners for a couple tankfulls (the previous owner didn't, except for anti-gel in winter) and running it hard so I thought maybe it knocked something loose, but that almost seems rediculous. I don't have a lot of money to throw at it, so any help is appreciated. Sorry for the long first post, just wanting to give enough info.
EDIT: Sorry, I meant to put this in the troubleshooting section.