The problem is noise created by the spindle motor when it turns on and probably some relay arcing as well. You should install a line filter as close to the spindle motor as possible:
http://soigeneris.com/cncparts2.aspx (bottom right). (Send me a PM about the relay arcing.)
Please note: This is not a 'SmoothStepper' problem per se, it is an electrical noise problem. With the SmoothStepper you will know right away when you have a problem like this, when running from the parallel port electrical noise will present itself a bit differently (like, "Mach did this weird thing today and I had to reboot to get it to run again" .)