No bill of sale? Seriously??? How did you get it registered?
I'm really sorry for your issues...but I'd say someone knew of some problems and was trying to get rid of it. I have no idea why you'd buy a car that was smoking out of the back without thinking something was wrong or at least having a 3rd party mechanic check it out. Obviously it was burning something, somewhere. Now you know that it was burning oil.
Sounds like you're going to have to replace the block at least...
Does it have any mods done to it?