Jeep - Liberty :: Strong Smoky / Burning Smell Whenever Had The Heater And Blower On

I drive a 2003 jeep liberty with about 98,000 miles.

Over the course of this winter, I've noticed a very strong smoky / burning smell whenever I've had the heater and blower on in my car. It's easier to notice it when the car is sitting still (say at a stop sign), or driving slowly. If I shut the car off and walk around it, I notice the same smell outside of the vehicle, around the front end.

My initial guess was an exhaust leak. I've had two independent shops look over the exhaust system carefully (with a probe) and they've found no leaks anywhere. They also checked all of my fluids (including oil), and said that everything was at the proper level. I also had them spray some cleaner into my vent fan's duct work, just to see if that would do the trick (they didn't charge me for it since they weren't 100% sure, and it didn't work).

The other day, I stopped the car and noticed a small amount of gray smoke coming out from under the hood. I had just bounced over a pothole when I noticed the smoke. I opened up the hood (with the engine running), and saw a small amount of smoke coming out from the left side of the engine, from beneath the coolant reservoir. The smoke was dark gray in color (looked almost like wood smoke). I asked the mechanic at the gas station where I'd pulled over to take a whiff - he said it smelled like burning oil. Within about 30 seconds, the smoke was gone, but the smell lingered.

He told me that there could be a small amount of oil leaking down onto the exhaust manifold and burning up, but that was just a guess.

So here's what I want to know. This smell is terrible. I have to figure it out, because whenever I turn the blower on, the smell is practically choking me. In the interim, I've been checking the oil level every time I drive (once the engine is hot), just to avoid a potential disaster. The oil level has been consistent over the last couple of days, though I haven't been driving very much.

I'll bring it back to the shop, but what should I ask them to examine? Could it be a bad valve cover gasket? Loose oil filter? Something else? Is this a problem that many Liberties have?