I would respond to the review with something like the following:
"We are so sorry this guest didn't enjoy her stay. Though she accepted a credit and extra cleaning and we did everything possible to make this right for her, she broke house rules by smoking and reviewed us poorly. We work very hard to make our guests as comfortable as possible but this was sadly not a fit for us. We hope that other guests will contact us with any concerns they may have after seeing this review and will continue to strive for excellence in all of our stays."
Remember that your responses are for OTHER guests and not this one. Some put a lot of effort into complaining to get freebies.