@wasf, it majorly seems to be rust and that is also colorizing the water in my opinion. Give it another cleaning if you like to and then switch to coolant. This is the best you can do at this point.
Coolant will stop rusting further and will also lubricate all coolant passages. Give it a shot.
Black smoke means very rich mixture. I have an idea that your choke is not properly setup on your carburetor this is where the problem is coming from. Get your carburetor fixed and properly installed by a good mechanic issue will resolve.
Regarding white smoke on startup, can you confirm is it slight but white smoke or thick dense white smoke. Normally head gasket issues causes coolant to pass on to cylinders where it burns to create white smoke. you have to keep these points in mind.