A friend of mine who co-slept was asked by her co-worker how she managed to DTD - her reply was "you must have a pretty boring sex life if you only do it in your bed and at night". I don't think co-sleeping has to interfere with intimacy - it might just mean doing things a little differently.

As for the smoking, as has been said, the baby should be on the other side of the mum anyway, so that shouldn't be an issue.