the carbon filter that was added to the car over here to pass emission control. Turns out that was the problem.
Absolutely classic. Similar here in the UK (and doubtless every country has its own me-too version). Here, if you see a heavily smoking 2004-ish diesel, it'll be the 'pollution reducing' EGR, or exhaust gas recirculation valve. To get NOx emissions within the legislative limit, they recirculate dirty exhaust gas back through the inlet to pass through the engine a second time, thereby burning up the NOx a little bit more. Trouble is, of course, that being a relatively dirty exhaust, in the respect of particulates that would otherwise be taken out later downstream by the filters, the soot instead is sent back through the inlet valves and into the combustion zone where it inevitably interferes with the combustion, leading to an even sootier exhaust which is then recirculated back through the inlet valves ...
Works fine on the assembly line to pass the emission tests, but a few years down the road, and the engine is nicely giving the local population every bronchial disease imaginable whilst laying down a smoke screen James Bond would be proud of. As Ross Noble would say: "We didn't think this through, did we?"
Console yourself with the thought that now your wrecked engine isn't causing any pollution at all - zero emissions - RESULT!
I seem to recall reading something recently about a car maker in Europe somewhere who had similar tricks to "meet" emission regs, that didn't pan out too well in actual use. Who was it now... can't quite remember the name ...