78000 km is not a heavy mileage at all and lancer engine is VERY reliable. These problems are most likely a result of poor maintainance or no maintainance.
My reccomendation is not to screw around mechanics or garage type shops. You would have your vehicle destroyed and make matters worse.
Take your vehicle straight to Toyota Capital and have them evaluate your engine. AGAIN DO NOT go to the so called trusty mechanics.. ( back yard mechanics or small shop type mechanics). I have learnt the hard way over 18 yrs of experience that they are not the right people to get an engine serviced from, regardless of how experienced or talented they may appear.
Now to your problems..
regarding smoke and rough idle. .. the vehicle computer would need to be hooked up to a diagnostic machine.. For this you would have to go to the Mitsubishi dealer. The machine would reveal in a heart beat why the engine is running rough ON PETROL and why there is smoke from the engine. Now while the vehicle is on diagnostic machine, ask them to check the engine compression( this would reveal the internal health of the engine and would thus TELL EXACTLY if the engine needs to b over hauled).
DO NOT touch the electrical system unless and untill u REALLY know wat u r doing.. Leave the Diagnostic machine tell u wat is actually wrong.
Now i m gonna tell u wat u are going to discover after the engine diagnostics (WHICH MUST Be performed even if it costs 2000 rupees or watever)
The RPM fluctuation is most likely a cause of a Sensor malfunction. IT could also be because the THROTTLE body needs to be serviced. Throttle body service is cheap and Toyota capital probably does it for 600 rupeees. infact throttle body service is a routine maintainance activity and u should get it done anyway.
Fuel Injection System with 75000 km must also be Serviced.
Do the above things and than call me or email me. There is absolutely no need to worry or depressed . as long as the vehicle is running. it can be brought back to brand new condition.
ati41@hotmail.com
0333-5240609