Polyphobic

Here in colorado we have emissions testing every 2 years. My wife's car is coming up for its test.
The car is as follows:
1991 4 door toyota tercel with 132,000 miles. 4 speed standard transmission.
The problem is that it smokes from the exhaust. Oil seems to be leaking into the exhaust system since I find a splatter of it on the pavement after it starts.
The car is not worth much. In your opinions is this worth fixing? Is it going to cost a lot?
The reason I am asking this is that we were contemplating replacing it with a larger vehicle since we have a 9 month old infant. However, I had not planned on doing this since money is tight. However, the issue may be forced if the repair costs a lot. I am seeking opinions on the cost range of a repair like this. Just trying to get some plans in place.

thanks,
an utterly incompetent car person.

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