Hi Luke
It is neccessary to have a second NIC for the internal network.
When setting up e-smith, you configure your "external" network being the connection with your DSL modem. I don't know about this other smoothwall program but i do know that e-smith's internal configuration works fine with connecting to my DSL provider and should with yours no worries. (i use the SME Server 5.1.2)
I set up my "internal" network by giving my second NIC a static IP address (eg. 192.168.100.1) and setting it up as a DHCP server for the rest of my computers. I then simply plugged the e-smith server into my switch using a normal straight ethernet cable, plugged my other PC's into the same switch, and set my PC's to use DHCP. Thats it!
Any more questions, let us know and will help you out as much as i can

Cheers
Rod