Stan.........long time ago, you used to haffta put water pump lubricant in yer engine coolant. Modern green anti-freeze already contains WPL. Unless you clean yer engine with special block cleaner, you will still have WPL in yer water jacket. It doesn't hurt to have old WPL floating around.
As fer yer original question, BIG guess, you have a WARPED flathead and yer headgasket LEAKED anti-freeze into yer cylinders and down into yer oilpan. Yer lucky you didn't hydraulic LOCK yer piston and break a crankshaft. While you "might" be able to "skim" yer WARPED flathead (0.065" max), I doubt it. Yer better off byte the bullet and buying a NEW high-compression flathead which also will increase yer 2N's hp from 23hp to 26hp.
As fer the SMOKE, using ATF or MMO (Marvel Mystery Oil) that is NORMAL to smoke all the oil off'n the CARBON that is caked/baked on top of the pistons. ........the amazed Dell