Howdy, you may want to post this over on the Model Railroader forum. I used to have HO but I have gone bigger and outdoors (like most of us here). I can't help with the smoke question but I can point you in a good direction for sound. Take a look at http://www.smallscalerailway.com/. They make sound cards for all scale for a reasonable price ($80). The owner, Greg, is very helpful. He also sells HO boxcars with a sound system installed.
-Brian
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