If you set your paths correctly in your general settings, ie:
/home/users/htdocs/ubb/smilies
(or whatever your absolute paths are)
Then you shouldn't be entering paths in your smilies settings like you are, ie:
ubb/smilies/flamethrower.gif
it should be just:
flamethrower.gif
If you can't set the absolute paths in your general settings for the smilie directory, then you have a mistake in your coding and this will not work.
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Duke