Hi Nicole,
Most likely the oil in the coolant is from a head gasket issue or issue with the engine block. Here is a similar case of someone that had a similar issue.
https://www.2carpros.com/questions/2006-renault-megane-yellow-sludge-oil-water-bottle-thermostat
What I would suggest is to test the system to see if you have a leaking head gasket. Below are some guides that will help with this. Unfortunately, there is no easy fix if this is the issue. Some of those sealants will buy you some time but eventually they will fail as well. I would suggest testing the cooling system and head gasket to see if there is an issue. If one is found, you can try some of that head gasket sealant but I would start preparing to have the head gasket changed.
https://youtu.be/W8kra65m15c
https://www.2carpros.com/articles/coolantantifreeze-in-the-engine-oil
https://www.2carpros.com/articles/head-gasket-blown-test
As for the smoke from under the hood. Unless there is an active leak, I would agree with you that it is just some residue burning off. Keep an eye on it and if it still smokes in a few days or gets worse, you still have an issue.
Let me know what you think after you review this material and we can go from there. Thanks
Friday, May 10th, 2019 AT 5:26 PM