wtf? is it just on the muffler, or throughout the whole system? some kids are just plain dumb. lol.
I would suggest patching those up with an exhaust repair kit and see if the white smoke goes away. It could be water vapor entering the stream through the "speed holes", turning to steam and then condensing again when it exits.
otherwise it could be the engine running rich (likely bad O2 sensor) or even coolant entering the combustion chamber
What does your failure report say? HC, NOx, sulphur, etc...that will help pinpoint what might be going on with the emmisions.
the patch kits might last a year at best. you'll have to actually fix the exaust by either welding patches on or replacing the affected parts. (or have a shop do it, whatever). I bet its embarrasing to barrel down the road sounding like a rusted out junker