I have a 1993 LS 400 that had the same problem.
I agree with viper-boy. The problem is likely the air control valve located at the bottom of the power steering pump. You could do as he suggests and bypass it; however, the valve only costs about $70.00 and is available at Toyota dealers. The part number is 17630-16040.
I replaced the valve and replaced both of the hoses that run from the power steering pump to the air intake and to the engine (they were both hardened and rotten). That solved the smoking problem, and I stopped losing power steering fluid.