If you remove the loom and repair it by cutting out the damage and soldering in suitable wire that has a high-modulus insulation, and heat-shrink sleeve the joints, then you know your not going to have to do it again.
For anyone that it might help. The D3W is basically the same too. http://www.bigtrucker.co.uk/files/d5w.pdf (2.1Mb) You won't have the control units, but the information on the heater unit may be usefull.
It depends on how much smoke, plumes of white smoke all the time is is running is bad, but a bit of smoke when it starts is normal. As for the smell, mine does that the whole time, and so does the heater on my truck, so that is normal.
The chap who advised you is pretty much spot on, it is either the sensor reading erratic, or the vacuum pipes are leaking, or a faulty turbo, so should be checked in that order.
It would have taken the fitter about 20 seconds to hook the car up during the service and read off any fault codes, not doing it as a courtesy is shameful and you may have got them to fix the problem earning them more money. I don't have time to check my wiring diagrams now, but will do later or tomorrow.
Personally I wouldn't take what the dealer says as right. Also check the big fuse in it's own fuse box near the battery, all the alternator supply comes through it.
The electronics in the heater can tell if a component is missing and not try to start if it is not there. Whether this is the case with the metering pump or not, I don't know.