White smoke will be emitted when its cold especially in this weather, start to worry if the car's warm.
Baffles are the "wall" sections inside the exhaust and sometimes get loose, hence the noise. A sign that the inside is going rotten. You can cut the box open and weld the baffles in place but it isn't really worth it.
Incidently, if it is the center box, you can buy a straight through pipe instead of the standard box system. Think R98 RUF (Simon) posted something on this. Remus do a s/steel version.