If it starts easily and does not use too much oil, I would tend not to worry too much about a bit of blue smoke. Possibly just the valve stem seals allowing oil into the intake. Not normally an issue with diesels as there is not much of a vacuum in the intake as there is no throttle. But this model has a throttle in the intake specifically to develop a reasonable vacuum for the power assisted braking, so that does not apply. If this is the case, replacing the stem seals is relatively easy and cheap.
The jumping out of gear seems unfortunately to be fairly common with the Series 3 box. Draining the oil and inspecting what comes out may indicate whether it is the synchro springs. Less likely is lack of tension on the spring detents that hold the fork shafts in place. Unless this is the case, fixing it is likely to be fairly expensive if you don't do the work yourself, as the box will have to come out and be disassembled just to determine the problem.
John
JDNSW
1986 110 County 3.9 diesel
1970 2a 109 2.25 petrol
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