I have just bought a new expansion tank and cap.

The coolant will expand when hot and contract back when cool, that's normal, the system runs under pressure as when a pressure is applied to the coolant it raises the boiling point if it is not using coolant and keeping between the high and low mark in the surge tank that's fine, a diesel engine smoke will be black on start up (over rich for cold start up) and it should be a dull grey hot running, if blackish the injectors may need servicing, if white this can be low compression issues also if white due to low comp problems the exhaust will smell strongly of raw diesel and it will sting the eyes some what.