if it only smokes when your using the hydraulic motor then the motor or the cables associated with it are the problem. The smoke might just be getting blown out around where the drive motor is and so it just looks that way.
But yes if your seeing smoke stop using it!
Call a service tech to come look at it before any further damage is done.
Remember... where theres smoke there is usually fire, if not right at first it will be if you keep running it. ;o)

My guess is something is loose such as a connection on a cable or inside the pump motor.