2001 Volkswagen Golf red oil light comes on

My car has suddenly decided to make every weird noise that it can think off. Firstly, the red oil light has come on with a beep noise. I have checked the oil level and it is fine. The engine now sounds like a tractor, the turbo doesn't seem to work as the 1.8 Gti now has the performance of a hairdryer. I even caught sight of blueish coloured smoke coming out of the exhaust pipe although that calmed down after a few minutes. There are occasional noises coming out of the engine when its driven which sound like whistles and there is another noise which sounds like a hairsprayer can being used. Any hope or shall i drive it straight to the scrapyard