Well, this is what it says in the OpenSSH security advisory (
http://lwn.net/Articles/3531/):
1. Versions affected:
All versions of OpenSSH's sshd between 2.9.9 and 3.3
contain an input validation error that can result in
an integer overflow and privilege escalation.
OpenSSH 3.4 and later are not affected.
OpenSSH 3.2 and later prevent privilege escalation
if UsePrivilegeSeparation is enabled in sshd_config.
OpenSSH 3.3 enables UsePrivilegeSeparation by
default.
Although OpenSSH 2.9 and earlier are not affected
upgrading to OpenSSH 3.4 is recommended, because
OpenSSH 3.4 adds checks for a class of potential bugs.
2. Impact:
This bug can be exploited remotely if
ChallengeResponseAuthentication is enabled in sshd_config.
Affected are at least systems supporting
s/key over SSH protocol version 2 (OpenBSD, FreeBSD
and NetBSD as well as other systems supporting
s/key with SSH). Exploitablitly of systems
using PAM in combination has not been verified.
3. Short-Term Solution:
Disable ChallengeResponseAuthentication in sshd_config.
or
Enable UsePrivilegeSeparation in sshd_config.
Since ChallengeResponseAuthentication is disabled by default in SME, it would seem that SME is not susceptible to this particular vulnerability at least. Also, I'm not sure how to read "between 2.9.9 and 3.3", if that includes 2.9.9 or not. In other words, 2.9.9 may not be susceptible to this vulnerability even with ChallengeResponseAuthentication enabled. However, 2.9.9 _is_ vulnerable to other known exploits, although I am told they are not trivial to exploit.
If you believe your system has been compromised, you might want to take this up with security@e-smith.com.