You shouldn't get any smoke from the exhaust nut .
There is a metal seal that's supposed to be under the nut, it may be missing, or the nut is not tightened corectly .
The exhaust nuts are known to be issues wuth these bikes, if an anti-seize type compound is not applied to the threads .
It's quite common for the nut to seize onto the threads on the cylinder .
If you can't get the nut to either loosen, or it stops after moving a bit, cut the nut off, or you'll be removing the cylinder heads and having the threads repaired .
I'd perform a compression check, before considering an overhaul of the engine .
The top end may need overhaul, if the bike has accumulated say in excess of 90,000 miles .
'81 and '82 model year bikes had issues with valve recession, don't know whay year your bike is .
The lower end of these engines are quite robust and usually don't need much attention, unless the engine was abused .
There is a date of manufacture molded into the side wall of the tires, it will look something like this 0415, which would be the fourth week of 2015 .
It's your call on how old of tires you want to ride on .