If its just a smoking turbo and there is no damage where the compressor wheel has caught the housing I would suggest a rebuild kit.

I have just rebuilt mine using one at £57 from ebay from a guy called mgturbobits which includes a rebuild guide.

As long as you follow the instructions to the word regarding the marking of the shafts and wheels to maintain the balance on the shaft you will not believe how easy it is!

Mine is now totally smoke free and boosts like a bastard. My thinking was its got to be worth a go for £57 over £400 plus for a new one, even if it proved to be just a lesson in how a turbo works!