I'm not really sure how smoke is done in this game, but I'm wondering if it has to do with the shader model version their graphics cards have. There can be some extremely funky effects when a game is written for shader model 2 or 3 and the video card is a shader model 1 or 2. Most times the game won't let you run if you don't have the proper version graphics card, however I'm curious if perhaps nVidia's new drivers dropped full support for SM1 graphics cards.
Btw there isn't anything you can do to update the SM, it's hardware reliant. I think using the correct generation of drivers may solve the problems.
If you do have a SM1 card... you'll eventually have to upgrade if this game decides to force SM 2 or 3. By the way, they are currently on SM 4, thanks to DirectX 10, and 11 has been unveiled which includes SM 5, and is to be released with Windows 7. Graphics card companies must be loving Microsoft right now, they are literally giving the companies reason to repackage old cards (updated a bit, of course) under a new name and price.