that's fairly low compression BUT most compression testers dont work that great with little motors, especially considering the motor displacement is about as much volume as the excess air in the tester...
smoke comes from a few distinct things. Worn rings isn't usually one, it'll make a 4 stroke smoke because you've got oil under the piston and so the rings allow oil past. that's not really a thing with 2 strokes.
Also bad seals won't affect the compression measured by a tester. youre measuring the cylinder compression above the piston, which isnt affected by the seals which only affect crankcase compression
Reason 1 - too much oil in the gas. if you're got the oil injector still on your motor, this is distinctly possible. they tend to go bad, but fortunately it usually ends with just excess oil dumping in. that'd give a heavy dark smoke. Also premixing with too much oil or combining premix and an injector will smoke.
Reason 2 - Wet gas. common enough, especially in rainy or humid summers or with old gas. Water in your gas makes steam in your exhaust and a heavy whitish smoke.
and reason 3 - as you've guessed, leaky transmission seals. smells like nasty trans fluid. usually really white smoke