BMW Repair: OBD codes and smoking on my E38, 2000 bmw 740il, bmw 740il

Question
Hello, I recently purchased a 2000 BMW 740iL sedan. When I test drove the car, nothing appeared to be wrong with it inside or out. When I purchased and drove it home there were still no problems. Suddenly, the next day I started the vehicle and saw an absolute plume of white-greyish smoke bellow from the exhaust. The "service engine soon" light then came on afterward. I took it to a mechanic and he hooked up an OBD scanner to it which read 1340 (engine misfires on startup) which scares me quite a bit. The mechanic told me it's probably just the PCV or some kind of diaphragm that attaches to a unit behind the engine, both of which will be replaced. However, I also noted some smoke trailing from the head gasket's rear which I also informed him about. What do you suspect the trouble is? my biggest fear is cracked pistons, or worse yet, an overhaul. If it came to that, how much would I be looking at paying?(just a ballpark figure)

Answer
Misfires on start up...An issue I would not let go too long.I would think there are a few miles on the car.With that thought in mind the basics would be needed checked.(ie fuel pressure,plugs,compression test,leak down test,checking ALL rubber hoses gaskets and seals)It is important to know what the fuel pressure is because if it is too much there could be cylinders flooding out causing a misfire.When removing each coil plug assembly checking them for ignition burn through,they would be white spots on the rubber.
The white grayish smoke does sound odd.If it is constant there are some issues for sure.If it stops when the engine is warmed up or after a couple of minutes run time it maybe seals or a valve.That is why you need to do a cylinder leak down test.It will give you the condition of the engine,wether it is valves or rings.If it was a cracked piston(which I HIGHLY doubt)it would be skipping and alot of oil consumption and then you'd be looking at a new motor(used).
The oil from the rear may be just gaskets leaking,which ones I can't say with out seeing it.It is important to take care of any oil leaks as they will cause drivability problems.
It is great that you have a code.So your next step is to eliminate all other issues.Don't jump into an assumption,make sure you cover the basics first.