Did you mark the images in Lightroom to republish? Select them and right (or control) click on them and mark to republish. Lightroom will need to reupload the images without a watermark applied so that smug mug can create new images with only its own watermark.
This is not new behavior. If you had smug mug set up to apply watermarks it will apply watermarks regardless of whether Lightroom already did. You really want to set it up the way that only smug mug does it so that Lightroom uploads watermark less images. This way the images on your website will all automatically have watermarks but if clients get prints from them, the prints won't have them.
Be sure you are changing your Publish Service setting when trying to remove the Watermark and not Normal file export options. There are independent settings for each of your Publish Services.
Right click on the Service name and chose 'Edit Settings' from the Popup, then change the Watermarking options within those settings.
If you use multiple services like Flickr, Facebook and SmugMug then you have to update each one to remove Watermarking if you previously enabled it.
Then if your photos are currently marked as "Published" you will have to select them all as a group, right click on one and choose the "Mark to Republish" option. Publish the Gallery again and all existing copies on SmugMug should get replaced with the correct version. Repeat these steps for other galleries as necessary.