Sounds to me like an air leak. I have had that happen (not the smoke part) with a Craftsman and my small Husky 36. In both cases it was air leaking into the crankcase and , because of the way 2 stroke engines draw fuel through the crankcase, it upsets the whole air/fuel thing.
I used the Crafstman for a trainign aid by cutting it up and I'm about to garbage the Husky. In my experience, unless you are a very infrequent user, it does not pay to buy cheap. My next small saw will be a Stihl arbourist model.

I have 2 33 yr old 041 Farm bosses. If you have the manual still, try ordering the seals. Or mebbe find diagrams on line. The old stuff has good build quality and is wicked easy to work on.