That is some weird stuff you have going on there. I haven't heard of anyone having trouble flashing a genuine LiteOn with LiteOn updates for the matching drive model. To get around this, you can modify the flash updater program with FlashFix
so that it will flash any
drive (even ones it shouldn't - so be careful). However, I would wait until dhc014 chimes in about this. He is the expert around here about LiteOn firmwares.
SMART-BURN can be disabled in Nero, as Action Jackson suggests, through "Recorder"->"Choose Recorder"->"Options>>" and then unchecking the "SMART-BURN enabled" box. But, as everyone has said, in general it isn't a good idea to disable it. Having it so severely restrict your burning speeds just doesn't make sense, and is outside the realm of my experiences. In fact, 1x isn't even a speed at which the LTR-54246S can burn, or at least it isn't a speed you can choose to burn at. The lowest speed you can select is 4x.
LiteOn has a utility that is also, somewhat unfortunately, named SMART-BURN
that will tell the speed at which your drive will burn the media, as selected by the SMART-BURN technology. Download it and see what it says for your media. By the way, are you saying you have some 40x Kodak media, or did I misread your post?