Thank you for your detailed response.Since I was the one that jumped the compression release rabbit,I should respond to your question about it.
Notice I advise "YOU" research it for "your specific engine",it's different from one engine to another. A common arrangement is a spring loaded cam that hold's exhust valve open at low revolutions.
Revolutions meaning far fewer than rpms at idle. The instant engine strats,revs sling cam out of way until engine completly stops. If your's is like that,make certain you set exhust valve clearance on EXHUST stroke,not on COMPRESSION stroke. Very common mistake that disable's the function. I doubt oil and smoke have anything to do with compression release,more likly gasket leak caused while setting valve clearance. I realize you are mechanically inclined but I'll offer something just in case your mentor overlooked it. Be very mindful not to let 2 seperate issues trick you into believeing symptoms are from a single issue. Stated differently,chasing 2 rabbits while thinking there's only one rabbit seldom leads to catching a rabbit. Either forget the smoke and oil leak for now or take time to find cause(s) before troubleshooting hard start.
The picture above shows a hole blown in the side of the engine, which is where the oil and smoke was coming from. Ran fine for a few hours after setting the valves. Took a lunch break, had trouble starting it but it eventually turned over.
Made a few passes before noticing the smoke, oil and finally the hole in the engine.
I just drained the oil. Lots of fine metallic shavings.