Autofit on longer non-Genesis hair usually causes problems, mainly crumpling to the mesh (as if often does with more loosely fitting clothing), but I have seen other issues too. I almost always cancel it and parent instead.

The smoothing modifier is applied by going to the scene tab, selecting the item and clicking the "Display the Active Pane Options" icon in the top left corner of the Scene pane. You will then find the Apply Smoothing Modifier action. If you have DS 4.5 it is under the Edit submenu, then under Geometry. This adds a new section in Parameters called "Mesh Smoothing". You can change the number of "iterations" and other options there in the Parameters tab. You can turn smoothing off there, too.

This whole Autofit business is rather hit and miss and altogether a big disappointment to me, although at least now in 4.5 it retains the item's morphs. I hope they can improve it—there's certainly plenty of room for improvement.