Honestly, it doesn't seem like Smalley understands the idea at all, and is mostly concerned quelling his student's fears and using traditional metaphors and symbols rather than clear understanding. He keeps (in my opinion, irrationally) insisting that Drexler is talking about manipulating things with robotic arms (which he never stated), rather than enzymes, simply because of what he knows about enzymes as they exist in our current understanding of chemistry. He doesn't seem to get that Drexler is attempting to convey the idea that we may develop the ability to create and manipulate something that works like an enzyme, but is not exactly like the ones we have today in terms of how it would work. Drexler believes that we can figure out how enzymes themselves work, and eventually construct something that works on a similar principle, which seems possible and worth trying towards given our current level of knowledge.
On their character...
Smalley has a good understanding of the present situation and current knowledge, but he seems to lack vision and a spirit of honest curiosity and inquiry. He doesn't strike me as a man of science, but rather as a concerned father who doesn't want his children's minds to be troubled due to an intangible threat that, based on current knowledge, may never materialize.
Drexler seems to have good vision, an ambitiously inquiring spirit that seeks to solve problems, and is very punctilious in his descriptions, never wasting words, citing his works where possible instead of rewriting what he has already written. However, he leaves enough gaps in his stated argument due to his efficient and theoretical/mental operation that he fails to assuage Smalley, who fills in all the gaps with his own ideas and present knowledge/assumptions, which say it could never work. He expects Smalley to be able to have more vision than he actually does, and thus doesn't elaborate on his meaning or dismiss Smalley's arguments, assuming that Smalley can follow the ideas he points to without needing to be walked through them.
So, what do you think? I know next to nothing of chemistry or physics, and this was my impression.