Oil smoke will look different depending on how much oil is being burnt. A little oil usually shows blue smoke, if you are burning alot of oil, and it sounds like you are, it will burn white and smell very strong. Could be piston/rings, could be worn valve guides/seals, could be both. I wouln't worry about the jetting until you get the motor fixed, if you mess with the jetting now, you will probably have to change it again when you get the motor running right. But generally you need to jet just a bit richer for a high flow air filter.
Yours truly, sincerelly, love always, Josh aka The DirtDemon.