There should be no way Deuce could have been reacquired by his owner off of FA, though...he should have went to waivers as soon as he was dropped. If this did happen on Sunday and Deuce went back to FA and was reacquired, then that is a stupid Yahoo glitch that should not have happened.
However, in the case of Smith, he could have been picked up and dropped to FA due to the Yahoo anti-churning solution (meaning a player just picked up and dropped is put back to FA to avoid a player from picking up and dropping all players). Therefore, he should have been a FA and could have been picked up by anyone.
Are you absolutely sure that Smith was on waivers and not a free agent? Ask the guy who picked him up if he had to use a waiver on him, or see if his waiver priority is now last.
You know what probably happened...the "Recent Transaction" list could have said he was on waivers, but it doesn't take the anti-churning thing into account.
It probably kicked Smith to FA after realizing that he was dropped sometime earlier today in order to prevent churning. But, the "Recent Transactions" board doesn't know this (it updates as soon as a player is dropped/added), so it just says that he went to waivers when in reality he was put back to FA.
I think that is the answer to your question. Yahoo does a good job in preventing churning, but in this case, it made things a little unclear. I don't think you have much of an argument because Smith was probably on FA.