Are Squats on the Smith Machine bad for your knees?

[visions]

That is very interesting. Does that also apply to other muscle groups? For example, does having stronger biceps from doing curls help you with pullups? Or increasing the strenght of your triceps by doing push downs help you with your bench? It does seem counter intuitive but personal experience has led me to believe that the body is very "activity specific" for lack of a better term. Meaning, that if you want to be good, strong or in condition to do that something the only way to do it is to specifically do that something. For example, it is beginning to dawn on me that interval running (sprints/jog) and just regular running doesn't really seem to help my conditioning in submission wrestling/Jiu-Jitsu. What I mean by that is my conditioning in regard to wrestling doesn't seem to change if I stop running. But if I just run but don't wrestle (say, due to injury) my endurance on the mat takes a big dive. So, I am coming to the conclusion, and I know this is a leap, that if I want to be in shape to wrestle I have to wrestle and if I want to get stronger in squats I have to squat.

Your intuition based on personal experience and reasoning is exactly right. Joints working synergistically specific to the imposed demand is only improved specific to the movement. Balance on a surfboard will not improve from improvement on a wobble board. Tricep extensions will not improve bench press etc. Sounds like you're getting plenty of knowledge through experience.