Hi hon -
Smith squats scare me - they can be VERY hard on the knees. My opinion is to stick to the real ones. Start with NO weight at all, and do two sets of 4 or 5 squats to see how it goes. Work your way up to 3 sets of 10-12 with just your body, then start holding dumbbells in your hands. Drop the set length down to 6-8 reps every time you increment, then work the set length back up to 8-12. Repeat.
Now, the fellas hold the dumbbells near their hips,
but their hips don't curve OUT like ours do, so I suggest you hold the dumbbells up at your shoulders, as if they were a bar:
Once you can do 3 sets of 8 squats with 20 pounds in each hand, you can switch over to the bar.
Free squats are better for core stabilization anyway, so you might as well bite the bullet and do the real ones.
Keep your knees in line over your toes, butt OUT, chest OUT, head up and eyes front. Watch your form in the mirror. I like to put a mat or a plate under my heels to target my quads. Some like this, some hate it. Just depends on your personal geometry.
GO SLOW, go light, and build up slowly. You will eventually be able to go HEAVY on these (ie it's reasonable to be able to squat your own weight), but it may take you a year or two to get there. I think it took me over a year to squat a plate a side (45 pound bar, plus a 45 pound plate at each end), and I STILL often drop it down to about 115 to maintain form.
I started with an 8 pound dumbbell in each hand.
It's not a race. Slow, gradual increments.