Let me ask, first, you are talking about an automatic transmission, right? Sometimes, folks will forget to let me know which type of tranny they are trying to shift. There’s a big difference in what may be causing the problem, as you can be sure.
Here are some thoughts about both potentials, automatic and manual.
Automatic:
If you have been trying to hand-shift an automatic and you have badly missed a shift point, then it is possible that you have badly smoked the clutches and bands. Yes, they are usually immersed in transmission fluid, but, if your tranny was down a bit to begin with and that is what started your problems with shifting, then, it may be that the clutches/bands were high and dry when you shifted and when the revs shot up, they smoked badly.
The same is true of the torque converter. If your transmission was down on transmission fluid in the first place, then, it was likely trying to send a flow of transmission fluid to the impeller blades, but for one problem, there was no fluid to send. The high-and-dry converter, at this time, could easily smoke. Or, it could also cause the gearing to smoke.
Finally, if your automatic’s filter/screen were plugged up and the entire transmission from impeller to valve body to output shaft were fluid starved, then, it could easily set up an overrev condition — for a while, until things blew out totally — as you described and it could easily produce all kinds of odorous and dense smoke. In any of these instances, you are looking at a rebuilt transmission that will cost you about $3,400 or so, unless there are parts you can save or unless you can find a suitable transmission at a salvage yard that you trust which can save $1,200 to $1,800 easily.
Manual:
In a manual transmission, there is a condition that can cause lots of smoke, a sticking throwout bearing.
The throwout bearing is the device that separates the clutch plate/face from the the engine side of things, or, it is supposed to. If the bearing fails and the clutch and friction plate remain locked, even though you are pressing the clutch to the floor, then it is more than likely you are seeing the clutch plate itself burn out, emitting great clouds of smoke.
If this is the case, then you are looking at replacing the clutch plate and facing, as well as the friction plate and facing on the engine side of things, as well as the throwout bearing and, possibly the cable because it may be binding in its runner, helping to cause the problem.
You care likely looking at a problem that will cost you the better part of $2,250 for all the parts and labor.
I’d suggest your next move is to the back of a ramp truck and then to a reputable transmission shop where the problem can be diagnosed.
Two things, please let me know which type of transmission you have and second, let me know what the tech finds.