It sounds like you may have found a large part of your problem. Some blowby is OK. Major puffing is something to be concerened with, but white smoke gently puffing from the breather when hot is normal for an NTC with some wear. I don't know the cost of an inframe, but the parts, especially aftermarket, are relatively cheap. The unkown is the labor, and if counterbores or decking needs to be done. http://www.iesc-diesel.com/Rebuild_Kit/Cummins/Cummins_855_NTC_Rebuild_In_Frame_Kit.html
I got an inframe price today of $6500 but the same shop had another big cam 350 and wanted $4000 for the engine and to install it.. Sound about right? Its been raining here all day so I haven't got to mess with it anymore.. It's eventually going to be a show truck so If I could get it to stop blowing oil everywhere I would be happy with it burning a little bit..