Air intake for heater
The heater draws air through the openings on the hood to the center on top of the firewall . The plate there is on top of the heater blower.
There is a rubber moulding that runs along the top of the firewall that seals to the hood seperating the intake air from the engine compartment.
First make sure this moulding is in place, intact, and doing it's job. Recently, there's been mention of the two rubber drain tubes being an issue. But first the main seal.
Smell- toxic- please better describe the smell- burning oil, gas, or sweeter would mean coolant. Two extra clamps and a 3" section of 1/2" copper pipe from you're local hardware store would bypass the heater. ( You're gonna loose some coolant.) I do this as we have a greater need for a/c here and yes there is a small amount of heat bleeding through.
Oil burning- should be evident- valve cover leaking, etc.
Gas- carbs or FI? running rougher?