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The oil light only detects loss of pressure not oil level. Your oil pressure sensor or switch monitors oil pressure in your engine. It sends these signals to the ECU and to your oil pressure gauge or warning light. Swap out the oil pressure switch.
As an aside, I worked in a place with artwork from a very accomplished Toronto artist who signed his artwork just 'HOXHA'.
The same thing happened to my 2003 ES300 - the smoke is coming from the oil seeping into the motor's cylinders. This is the classic "Oil Gelling" problem in Toyota and Lexus vehicles. There is a factory recall on it, but it only covers to 2002 ES300 not 2003. The Lexus dealer confirmed my "oil gel" problem and went to bat for me with Lexus - they got the repair approved - Thank you Mr Local Lexus Dealer! The cost was nearly $4,000 - paid for by Lexus.
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