By any measurable standard Alex Smith is a bust. Drafted in 2005 Smith turned in one of the worst seasons as a starting QB since "Bubby" Bristor (yeah, I went old school) with a 40.8 QB rating 50.9 completion percentage. Beyond the numbers he looked lost. His footwork was terrible and he inspired a sense of impending disaster on every play. He flat out looked lost. The most positive thing about his rookie campaign was that it was so terrible it left room for his sophomore year to be a marked improvement.
The last game of his second season he played his best game as a 49er upsetting Denver and keeping them out of the playoffs, but even in his best game in the NFL....he looked bad in the first half. He posted a 74 QB rating his second year, big improvement but still bad.
The biggest improvement between his first and second year was in his footwork and ball handling, having only played out of a shotgun in college it took him two NFL preseasons to look like a QB when taking snaps from under center, but are three areas where he has never improved.
The first and most obvious is accuracy, Smith has been under a lot of pressure (pass rush) as a 49er, but even on plays with good blocking his accuracy; especially on long throws, has been bad. This might be an area where he could improve over time, but I think it's unlikely. You're either good at throwing a ball through a tire or you aren't and he's never in his career had a stretch of play where his passes have been on target.
The second biggest problem in his game is bad decision making, I remember a play is second year that illustrated how bad both his choice of passes were and how bad Vernon Davis' route running skills were. Davis ran a route where he should have been wide open, there was nobody in the flat. He should have ran to daylight (a deep square out 10-15 yards than a 90 degree turn right), the only player that was in any position to cover him was a safety that was sitting on the deep route. Davis instead ran a flag pattern (15 yards than a 45 degree angle right) giving the safety time to cover him. Alex Smith watched VD the whole time and under threw him a little giving the safety time to get underneath the route and get a pick, terrible decision to throw the ball resulting in an interception. Decisoin making is the area of Alex Smith's game where he can improve the most by settling down, being under less pressure and just getting more comfortable with play QB in the NFL.
The worst problem with Alex Smith's game and one that I doubt he can improve on is his inability to track multiple receivers at NFL speed and find his 3rd and 4th options. I know Alex smith is a smart guy, but this isn't a measure of intelligence as much as "mental athleticism". I'm guessing Smith would also be a bad John Madden's football player for this reason; he just never seems to get through his progressions quickly. What this translates to on the field is that if he's playing QB and you ever have more than two guys running a route (most passing plays have at least three), than one or more will be wasted. Even if his 3rd and 4th recievers are wide open Smith won't see them. Some of this is lost on television because you don't see the whole field unless the replay shows you the wide open guy he didn’t throw to. If you've ever watched Alex Smith live you'll know what I'm talking about: he consistently doesn't recognize wide open receivers even on plays where pass rush isn't an issue.
OK, so that's the bad and there was a lot of it, but now I'm going to tell you why I'm rooting for Alex Smith and even on some level consider myself a fan of his. Physical and Mental toughness. This guy has been destroyed both on the field and in the press, has played terrible and has kept a positive attitude through it all. He wasn't a distraction when benched and by all accounts has tried his best to be the best player he can be. As busts go, we drafted the Anti-Ryan Leaf, a classy guy and hard worker who just doesn't seem to have the skill set to succeed in the NFL. This is a guy who renegotiated his contract so he could try to finally be the guy his team thought they drafted and don't think he couldn't have signed the same contract with another team after forcing the 49ers to cut him, someone would have been seduced by his arm strength, height and athleticism. Even though I think his problems as a QB are insurmountable he's still very young (only 25) and I don't think he'll stop trying to improve, if there was quit in this guy, he'd have quit a long time ago. So please by all means prove me wrong Mr. Smith, either way I'll remain a fan of the person if not the player.