OK as mentioned, the '89 is still a 1st Gen MK2. The primary differences are the NK2 has a 1300cc motor, improved 4 piston brakes, and the hydraulic antidives are replaced with electrical antidives. In general neither engine is really known for smoking as their longevity is excellent. The clutches are hydraulic master/slave for actuation and have the typical issues with any hydraulic system. The clutch assembly itself is easy enough to replace. You mention the owner was complaining about smoking which leads me to think he may have added friction modifiers to the oil such as STP, etc which is a no-no with a wet clutch.
The bike sounds like parts bike status to me...