Blue smoke...Turbo help

I have a '95 850 turbo wagon with 97,000 miles on it. Hate to say it but this car has cost me a fortune. Fun to drive, grievious to maintain. All maintenace has been done on time and at the dealer. I have used synthetic oil since day one. Evaporator core, rear seal, steering wheel,trim pieces, tires...the list of failures or low milage repairs goes on and on. Last month the water pump crapped out suddenly and it overheated. I pulled it over within 90 seconds but the head warped over 10/1000ths. The damage required a head rebuild, a new radiator (plastic tank melted), water pump, and a new belt. While it was in the shop, I also had the front shocks and bushings replaced, put a new boot on the right cv joint, and had the timing belt replaced while the engine was open. The power steering pump was growling and was discovered to be leaking, so we did that too. New oil, oil filter, air filter, chassis lube, and other fluids. Total bill was $5000.00.

Car is driving fine now except that at idle blue smoke will billow from the tailpipe intermittently (It had begun doing this before the head warp.) I told the mechanic (and I have faith in this guy...rave reviews, 30 years of experience....and honest: When I got the car back from all this a hard turn would cause a popping sound at the front wheel. I took it back and he looked into the noise...turned out that the mechanic had dropped the cv joint and axle on the floor when changing the cv joint boot and it had cracked a part of it, which was not discovered until they repulled, cleaned, and examined it more closely. He replaced the entire joint and axle at no charge.) Anyway, I left the car with him for a few days so he could drive the car and experience the blue smoke. He wanted to make sure that the smoke wasn't antifreeze in the exhaust system burning off. As I said, the blue smoke is intermittent, usually happening once the engine is warm and the car is in idle, like at a light or at the bank drive through...very embarassing. He experienced the smoke and confirmed that it was oil smoke, not antifreeze. He retested the compression and did a leakdown test on the cyclinders...both checked out ok. So, he says he is pretty sure it is the turbo leaking oil into the exhaust and that the parts and labor for a rebuilt turbo will probably run $1200-1400.00. His labor runs $60.00/hr.

Finally, a check engine warning light has reappeared on the dash which has been decoded as a bad knock sensor. He says that this is a timing retarder and doesn't think it would cause the smoking.

I need advice. Does my smoking problem as outlined point to the turbo? If so, can it be anything other than the exhaust side seal that is causing the problem? If so, can it be fixed without a turbo rebuild? If not, who is reliable to rebuild it and what is a reasonable cost? What make and model turbo is it and is it unique to Volvo? Is there anything in removing/reinstalling a turbo that a handy person cannot handle (I removed and reinstalled the engine in my kid's 1980 244 DL and am restoring a '67 Jag E-Type. I have never messed with a turbo, however). Where can I get a manual for this engine that would guide me through this repair?

Your advice would be appreciated. If you add the turbo estimate to the recent repair bills, I will have spent close to the value of the car in the past month or so....its getting crazy and my wife is giving me mucho crappo for not having just junked the car in the first place, given its poor reliability andin the past.

Ed Williams