Can somebody explain what a puff of smoke at start up means? I assume it is a valve question. I had the valves vacuum tested before installing the head, three were fine but one was a bit lower than the rest. Any wise advise?

My guess is that it is a valve guide question. One way to check for
head gasket leaks is to fill the water system right up to the top, then
run the engine till the thermostat opens with the cap off. Combustion
pressure is a lot higher than any coolant pressure so you will get
bubbles up in the radiator. You have to have it very full to make sure you
can see all the bubbles.

Unless you are seeing bubbles or losing coolant I would not worry about
it. Mine have all done that, and I believe that the oil in the valve guides
drips down onto the valve head or into the cylinder at rest and when you
start it up it is burned and blown out the exhaust. It is such a small
quantity that you don't notice it in regular running.
--
George Downs, The "original" Walrus3, Bartlesville, Oklahoma

Does the car run unevenly for a few seconds right after you start it?
Are you losing a little bit of coolant each week?
If you've answered yes to the above questions, you could need-

A new head gasket!

What happens is that water leaks into a cylinder as the car cools, then has to be burned off when you start.

However, if there's no coolant loss, and the car runs well (or just evenly) as soon as it starts, then:

Valve guide seals could be the culprit. Or the guides themselves. A bit of oil leaks past, and has to be burned off. It causes little harm- BMW 2002's do this regularly. You'll also get a puff of smoke if you wind it out to 5500- 6k and then close the throttle- the vacuum in the engine will suck a bit of oil.

How to tell the difference? Sniff it! Really! Coolant will smell sweet, while oil will smell... well, like burnt oil!

If you have power brakes, it could be a leaky booster or master cylinder- but that's REALLY unlikely on a 122, as almost none have vacuum- boosted brakes. Again, pretty common on an '02...

HTH,
Toby

MittenHed's rules of smoke:
Blue is oil, black is fuel, white is coolant.
If your cloud of smoke smells sweet, you have probably got a head gasket problem. Bummer, man.