The smoke seems to be coming out of the top of the engine where the air pipe goes from center of the turbo to the air box do you think it's the vavle seals?
I'm assuming that you have the 1.6hdi. If by "the top of the engine where the air pipe goes from centre of the turbo to the air box you mean the end of the plastic rocker cover, or oil separator as the Haynes manual calls it then this will be oil vapour from the crank case, which condenses and forms the oil in the pipes as you describe.
I would chuck it back together with a new air filter and see if the exhaust smoke improves. If it is burning oil via the seals then it will smoke more on start up and the smell of engine oil being burnt is quite different to the smell of normal diesel fumes.
Whilst you are under the bonnet make sure that any smoke isn't coming from the area of the injectors as blow by leaks are quite common on these and can cause huge problems if not fixed quickly.
Now going to put it back together then will update.