Check that the chain is on the right way around. The cutting edge of the teeth on the chain, at the bottom of the bar should face towards you and away from you on the top. It's most likely that the chain is facing the wrong way. If you don't know how to fit a chain look at the video on
http://www.ehow.co.uk/video_4419336_replace-chainsaw-chain.htmIf that's not the problem then the chain is blunt and needs to be sharpened badly. You can sharpen it, with a special file which can be got from chainsaw dealers, or take it to a garden tool hire centre and have it sharpened professionally. It has to be sharpened professionally from time to time anyway to keep it cutting straight so if it's that blunt I'd recommend you get done professionally now.
The smoke if it's coming from the chain is caused by overheating from trying to cut with the chain which is too blunt or turned the wrong way. If the smoke is coming from the engine check your fuel. You should have petrol mixed with 2 stroke oil. The saw manual will give the ratio of 2 stroke oil to petrol. If you use too much oil or if it's not 2 stroke it will cause smoke from the engine. Also if you use cheap oil it can cause smoke. It's best to use good quality oil like husqvarna or stihl 2 stroke. These also protect the saw better than the cheap brands you get at car service stations which are really only meant for boats which are water cooled.
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