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740T + blue smoke/white smoke = Head gasket? LONG 700

1991 740T 210K kilometers. I've had an issue for a little while, I've had embarassing blue smoke at idle and downhill for about a month gradually worsening and zero oil leaks. Investigating today, I got heaps of white smoke at idle and driving, it improved as I sped up. Over this period of not understanding the problem but trying to solve the problem and worrying about the PVC (clean as), a broken ring(I have piston slap)turbo, all seemed ok and car is strong. Today I find trans fluid in the water and vica versa but the sump oil seems ok.
I now assume a blown head gasket and that combustion pressure has entered the cooling system and somehow caused a fracture in the trany cooler, but I'm very confused as to why there is a trany fluid water exchange and how this has happened.
I really hope someone can help me with this.

Cheers
Ian






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