What qualifies as being "removed"? Obviously at the beginning of my turn they are "removed" and the damage is dealt, but what technically happens when smoke cloud is outwitted or the belt wearer is KOed. Does the smoke "dissipate" or does the taking away of the smoke qualify to trigger the damage as you "remove" the pieces?

Well the power cannot be outwitted because the character who is given the power action never "possesses" the smoke cloud they just can use it.

As far as when the belt wearer is KO, the sequence as far as I have been to understand, is that the character becomes KO, after he/she/it is KO, you check the map for any lasting items he/she/it was carrying, those items drop (be it Super Strength or Relic that was rolled for), then you remove any Barrier Special Markers and Smoke Cloud Markers, now since the game resolves in the active players turn, they could choose the order.

I as the active player would always choose this order since the character is no longer on the map (being KO) when the smoke cloud is removed it doesn't have anything to make it go "POP".

Hope that helps.