[jor]

This is the head in question Laney. It does have the bucket and shim arrangement so would be the correct one for your car - providing of course that your engine needs one. As Peter points out it is difficult to see how someone can correctly diagnose a cracked head based on the amount of smoke produced. I've not read much about cracks in the head, but have seen a few reports about ones in the block, depth of same being important as regards continuing function.
Despite Craig's endorsement above (!) a note of caution must be added. The engine came from a chap who designed potato planting machines and had a mini fleet of 740's. This engine I was assured had had the head refurbished and was about to go into one of the cars, which suffered a major prang before the planned transplant. Bit miffed then to find out after lugging it from north lincolnshire to hear a pistol shot noise on turning over the engine by hand - the intake valve on no.1 cylinder was sticking. So should this head be fitted this would require checking out.
As you can see from the photos the head otherwise looks ok, a non volvo/vw gasket had been used and you can see the remains of the composite material round the edges, as well as the black area on no.1 where the gasket has blown thereby leaving a connection to the coolant passageway. The smaller valve is the exhaust, the larger the air intake. The third circular area is the exit from the pre-chamber, the entrances to same being occupied by the injector and glow plug. Probably the best thing to do is to get the garage to do the inspection first to see exactly what is required, before embarking on a possibly pointless journey.
The tools needed to check the valve clearance can be got from germany if you cannot get hold of them here and the procedure does not appear to be that difficult i.e. it's something I would be reasonably happy to try myself.
Incidentally, one of the ways to increase power output is to optimize the compression ratio. This is done by measuring the height of the pistons at TDC and then using either the 3 part gasket, or reducing it to 2 or1 layer as per the instructions in the manual.
jor