Smoke came outa the hood and the AC doesnt work...

[UsEr X]

So my dad was driving his E39 540i and we notice the A/C doesnt work all of a sudden. 5 minutes later smoke comes out from under the hood and it smells really really bad.

Looked at it and I think the compressor or clutch on the compressor has gone bad. Also before this happened there was a big decrease in performance, like acceleration sucked etc.

Is this a common problem?

[mikemaster]

When my evaporator blew, the coolant leaked out the drain hole and onto the exhaust, which caused smoke. You might want to check if this might have happened. Get under there with a flashlight and see if there's oil on the exhaust downpipe.

[UsEr X]

How would that affect the A/C though?

[mikemaster]

The evaporator is part of the AC system. If it springs a leak, you lose all the coolant which means no more AC.