Then I would go with a good rebuild because with a used motor , you are rolling the dice . Since he already bought a few new major parts then a rebuild would be the way to go . But you need to find out why the smoke . Bad turbos will smoke . Also ID the knocking noise .
Mine had a knock awhile back . Number 5 rod bearing was the cause and the motor had only 46k miles , came from an J30 . It has over 150k now .