A primary reason for this problem is the blown head gasket. When this happens, the pressure gets built up in the crankcase, and these forces the oil to get absorbed into the air filter. This results in the release of smoke from your generator. In such cases, the generator completely stops working. You should not wait for this to happen and shut off the machine to lower the risk of damage. You have to repair the device so that you will be able to use it safely and effectively again.