[Vwdiesel] Blue smoke on deceleration?

[Shawn Wright]

My 85 1.6NA has been starting to smoke a fair bit lately, not just at cold start Yesterday 
I noticed a large amout of blue smoke after a long 2nd gear back road descent, when I 
entered the paved road and stepped on it - a big cloud of blue, something I've never 
had before. Compression is around 350-450--400-375, nozzles were new a year ago. I 
recall blue smoke on deceleration being a sign of worn valve guides or seals on a gas 
engine - does this also apply to diesels? What else could result in blue smoke in this 
way?
The engine is consuming a fair bit of oil, perhaps 1/2L per 1000km/600miles or so. It 
does leak also, but I suspect most of it is being burnt. 

If I need a rebuild, I'm wondering about using a 1.5 block with a 1.6 head. Will this 
work? I have a 1.5 block complete with good pistons, but the head is badly marked up 
on the face. 
Shawn Wright
http://members.shaw.ca/vwdiesels
'88 Westy 1.6TD 5 speed
'82 Diesel Westy 1.6NA
'85 Jetta Diesel 1.6NA