Here's another perspective.
The Smith machine locks you into a fixed plane of motion, which develops what is called 'pattern overload syndrome'. This was coined by Paul Chek and is explained as
People get a pattern overload from using the Smith machine. The more fixed the object, the more likely you are to develop a pattern overload. This is due to the fact that training in a fixed pathway repetitively loads the same muscles, tendons, ligaments and joints in the same pattern, encouraging micro-trauma that eventually leads to injury. If Johnny Lunchpail always uses a Smith machine for his bench presses, he ends up working the same fibers of the prime movers in the bench press all of the time: triceps brachii, pectoralis major, long-head of the biceps, anterior deltoids, and serratus anterior. But he can't change the pathway, the bar will always be in the same position. This commonly leads to chronic injury over time. The weight is stabilized for you. However, the joints operate in multiple planes. Use of the Smith machine, greatly decreases stabilizer activity. That creates a problem when the trainee returns to free-weight training. When that happens, the trainee is exposed to the three-dimensional environment called real life.
This clearly applies to any exercise. Because of the mechanics of the knee joint, the body will alter the natural bar pathway during a free-weight squat to accommodate efficient movement at the knee. A fixed bar pathway doesn't allow alteration of this pathway for efficient movement of the joint, thereby predisposing the knee to harmful overload via lack of accommodation.
If your feet are out in front of you, you tend to push 'back' against the bar. Doing so forces the hamstrings to function as extensors which decreases their protective effects on the knee - the result is increased sheering force on the knee. Again, over time, chronic injury.
Some might bring up the issue of 'knees going over the toes' with free bar/full squats. It's a simple biomechanical misunderstanding.
If one were to assess knee injuries in athletic (read as: sport) environments, it becomes apparent that a high percentage of patellar trauma cases are sustained while the knee is beyond the all-sacred toe-line. In a misguided attempt to avoid knee injuries, the exercise community has therefore made this knee position taboo. In reality, the opposite reaction would have been preferential. Since this knee position is unavoidable in sports, or even in everyday life (try walking up or down stairs or a hill without your knee crossing your toe line) the proper way to prevent injuries is to strengthen the musculature around the joint by allowing the knee to travel into the “unsafe” zone in a controlled environment.
All joints contain feedback mechanisms inside the connective tissue and joint capsules called proprioceptors. These communicate with your nervous system to tell your brain what position your joint is at. This is how you can close your eyes and be aware of exactly what angle all of your joints are at without actually seeing them. To simplify a complicated issue, the more time you spend with your knee past your toe-line, the more you teach your nervous system to activate the protective soft tissue around the joint therefore PREVENTING injury during athletic situations (Supertraining, Siff & Verkoshansky, 1993). Close your eyes and think of a highly succesful strength coach. Yep, he agrees.
The take home message - learn how to squat with a bar.
