Hello Manuel!
If you want to receive helpful advice in this forum, you need to provide a certain amount of information so that someone can assist you.
Please post the engine code (MKB) and the mileage of the engine. Oops, it says 1Z in the title

, but it could still be mentioned again in the text.
Well, a loud knocking sound to me suggests incorrect injection timing and/or faulty fuel injectors.
The injector control valve piston in the ESPim area might be stuck in the "early" position. This would then cause a very loud knocking noise from the engine.
The diesel puddle on cylinder 4 smells strongly like a faulty injector, which may even be dripping. Defective injectors can also cause knocking and simultaneously produce blue/black smoke (incomplete combustion).
Depending on the mileage, the blue smoke could also be caused by burnt engine oil, which could originate from the turbocharger, the valve stem seals, or the piston rings.
Since you installed the engine in the bus, the installation angle could also be responsible for the blue smoke.
As you can see, the possibilities are diverse. Therefore, it would be great if you could provide us with as much detailed information as possible about your engine.
Regards,
Alex.
AUDI A3 1.9 TDI, EZ 12/96, ursprüglich MKB AGR, umgebaut zum AHF mit GT1749V-Lader, verkauft mit 250tkm
Golf 4 1.9 TDI, EZ 1/98, MKB ALH, jetzt auch mit GT1749V-Lader, verkauft mit 300tkm
Touran 1.9 TDI, EZ 09/2004
Audi A4 Avant 2.0 TDI, EZ 03/2010