1995 Volvo 850 Smoking

I just bought a 1995 850 Turbo Sedan (200,000 miles). It had been sitting for a while. When started it was smoking blue/black smoke and smelled of gasoline. It also has an oil leak. I was told that the smoke would go away after it had been run a while. I started it after getting it home and a steady stream of greyish smoke started coming from the exhaust pipe. Then I turned it off, and it wouldn't start back up immediately (wouldn't turn over. Even with a new battery). I waited about an hour, and then it started up, again with a steady stream of grey smoke.
I checked the oil, and it's about 1 1/2 inches above the "fill line" on the oil dip-stick. Could that be causing the smoking? The car runs fine, and it has great "pick-up". It's just smoking. I'm afraid to start it again, because I've been told that it might also be the headgasket, or be a cracked head or block. Or possibly a fuel problem (something like sugar being put in the gas tank, etc.). I don't know, but I don't want the engine to "lock up" or be damaged. Any advice?