how do you make smoke coming out of the muffler?

Easiest way is to download a smoke brush or use a smoke stock image. You can find both at deviantart for example.

Also, you can draw some random lines using the pencil tool around the muffler and smudge it using the smudge tool until you get the satisfied result.

Another way which ocours great FX is, to cut out clouds from
a picture of a clear blue sky with random sheepclouds...( german translation )
Form these cloud into a smoke cloud...try to experiment with [ Blur - Motion Blur ]
Selectiv Colour... [ try to change an highlight the black, gray, white areas.
Than take the rubber and erase some places. Some mor, some less....
Its not that difficult, but a lil bit .....

Sniper-X