My transmission doesn't shift & white smoke comes out of the tail pipe.

I think what you have is a leaking vacuum modulator on the transmission. Should be a vacuum hose between the engine intake manifold and the transmission. Follow the hose to an external component on the trans and remove the hose from the trans. Check inside the hose for transmission fluid and if present, replace the modulator and hose. This should take care of both concerns. The modulator has a rubber diaphragm with vacuum on one side and ATF on the other. If the diaphragm leaks, the fluid is drawn through the tube and burned in the cylinders which produces thick white smoke in the exhaust. It shifts when the gas pedal is released because as soon as the throttle plate shuts, vacuum increases to maximum and provides just enough to shift.

It sure sounds like the head gasket is leaking coolant into one of the cylinders after sitting for awhile. Might want to check that out first. Have a repair shop do a combustion leak test to confirm. Now, the transmission delayed 1-2 shift problem sounds like the detent or kickdown cable needs adjusting!! That is a pretty common problem on this vehicle and an easy fix! But for now the head gasket deal is the first thing to adress.