CRS - was the powerhead covered with oil on the top, the bottom, or both? That crankshaft is the same as on my 1961 18hp, I believe. There are 2 seals (one on each end).
- If the oil is all under the magneto plate and on the top of the powerhead, it's possible the upper seal is leaking. If so... it's possible to replace that top crankshaft seal without pulling apart the powerhead (special tool, etc.). The parts are all in the link Shaugh posted, under the "crankshaft and piston" grouping.
- If the oil is all over the ph - and since you don't have the history - then it could literally be anything (or nothing more than just bad hygiene).
- The smoke could be caused by one or more of several factors. Is it smoking through the exhaust housing? If so, it may not be a problem... could just be carbon on the piston heads or in the exhaust cover pan. If from somewhere else, that could be important.
- Is the top of the head cover, or the exhaust cover, extra hot? Or is the exhaust cover discolored? If so, it just may have been (or still be) running very hot with the thermostat closed, or the impeller may be damaged. That could cause smoke just from any residual oil or fuel/oil gunk left over on the powerhead.
I'm not sure if your engine has a pee indicator or not... the 60's 18s and my 1974 15 do not, but I've added them to all of them. It's easy to do, and here's where I learned it. You can always be confident your impeller is good and the intake isn't clogged. https://www.youtube.com/watch?v=6w6YJlmUSDs
If you got it running just by re-building and cleaning the carb, that's probably a good sign that it's worth putting some effort into replacing the thermostat (or at least checking it to see that it opens in warm/hot water) and the impeller. You probably know this already, but these are water cooled and the impellers get brittle after a few years (even if they were always run in water, which you also can't be sure of).
That engine is a great platform... very tough and reliable. You'll probably be glad to have it.