"I am thinking that i need to replace the valve cover gasket?"
See.., you're already a Bronco Mechanic. That's all it takes is common sense & good judgment.
Most likely the valve cover. (one 'lil drop of oil will make a puff of smoke)
Check the tightness of the small bolts that hold them on. However, they should be just snug as too tight bends warps the bolt holes. If if fact, you have to put on a new gasket, clean the cover surface & tap the bolt holes flat against another flat surface.
"....liquid was coming out of the tail pipe"
Yes.., this is most likely condensate. An assurance test would be to check it when the eng. is good & warmed up, after a run around town for a bit. That will evaporate most, if not all the moisture.
"Hope I am no driving you crazy with all these questions."
Naw.., This board is like a memory quiz.., it keeps the brain juices flow'n >

< <'> However, you may have some tougher questions down the road.... :-B