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As Steve implied new fiberglass insulation will smoke at first. Freaked my wife out after an engine rebuild and all new insulation.Also - any water in the insulation will steam until it is all dried out. If you have a pinhole leak in the pipe or elbow it would wet the exhaust and may not yet be enough water to cause any engine problem. If it smokes after the exhaust gets hot then stops after a period of time but smokes again the next time you run, it sounds like a small leak. You should be able to tell by running the engine without the insulation.
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