The reason why I have it setup this way is per recommendation from SME staff.
There are no staff.
I had asked the best method of setting up a transparent proxy and was advised on using 2 nics (1 for the outside and 1 for the inside) and to setup sme server as a Server - Gateway. Is this not correct?
Correct. servergateway with 2 nics is the only way to work as a transparent proxy. You could use 'private server and gateway mode' and then set http and smtp services to access->private.
But then again, if you have no web applications installed, you are very unlikely to be vulnerable to any http attacks. You should be spending your time elsewhere - e.g. ridding your local network of Windows computers.