Hi, if you are sure the smoke is coming from the exhaust then you have a typically neglected GTi in need of some valves/guides and possibly a rebore with new pistons and rings. I'm sure your local garage will check it out for you if thats what you prefer, these cars are pretty basic even the later 1.9. Also google "peugeot 205 GTi club" & have a look.could be worth joining a club for all the info you could possibly want! good luck from a fellow Pug owner.
Chris P.Duck, January 2010