Dr. Diesel thinks these three diagnostics tools have withstood the test of
time.

Engine Smoke

• White smoke indicates water. Either coolant leaks, bad head gasket or a cracked head. Probably the latter on a Perkins 4154 or 4108.
• Blue smoke is oil. This indicates that worn rings, guides or liners are dumping oil into the combustion chamber.
• Black smoke is excessive fuel. Bad timing, worn injectors, leaking injection pump, etc.

Coolant

• Bubbles in the coolant mean compression gases are entering the system. Maybe a bad head gasket? Oil in coolant suggests a cracked head, block or the oil lines may be incorrectly installed on a Continental flathead.

Dipstick

• Smoke or pressure coming up the tube indicates a problem in the lower end (i.e. not the head), usually a bearing problem. Combustion and exhaust gases are pressurizing the crankcase as a result of worn rings or liner.

While the above diagnostics aren't conclusive, you should confirm them with oil analysis, magnafluxing, pop tests, etc.