[dnanian]

What happened? Exactly what is supposed to happen, and what it specifically says will happen. I even documented this exact case in the User's Guide.

Smart Update is, as it says, just like Erase, then copy. So, imagine it erases the drive, then copies what you said. You said copy the User files. So, conceptually, erase the drive, then copy the user files. What is left on the drive - just the user files.