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Smoke simulation is a neat new feature of Blender 2.50. If you are familiar with Blender's particle system and the fluid simulation you should have no problem with blowing smoke in Blender 2.50.
To make the smoke render, you need to create a volume type material and add a Voxel Data texture. These are new as well. I will demonstrate how to make smoke, from start to the the final animation. I will point out the new settings, which you can play with. Please post your renders on Youtube as Video Comments. Let's have a little Smoke Simulator Competition.
By the way, you can download the latest 2.50 Alpha 0 version from blender.org. Since the developers are constantly making changes, make sure you have the latest and greatest.
So let's get started. Start with the default cube. Scale it 4 times (S - 4 - Enter). The large cube will be our domain, the area in which the smoke is generated. Press the Z key to go into wireframe mode, so we can see inside the cube. Then add a UV Sphere, within the domain (Shift-A, Mesh, UVSphere). The UVSphere will generate the smoke particles.
Select the cube. Select the Physics tab, all the way to the right. Scroll down until you see the Smoke section. Click the arrow. Click Add. Enable Smoke. Click Domain.
Select the UVSphere. Click Add. Click Flow. Next, go to the Particles tab, and click the Plus sign to add a Particle system. It is called ParticleSystem by default. Accept the default. Of course, you can tweak all the particle system settings later to make the smoke go wherever you want. Go back to the Physics tab, and the Smoke Section. Enter the ParticleSystem name under Particle System.
Press Alt-A to animate. We can see smoke coming out of the sphere.
We're not done yet. Press F12 to render. Only the cube renders. To get the smoke to render, you need to add a material and texture the cube domain in a new way.
Select the cube domain. Add a material. Click Volume. Play around with the transmission, scattering, emission color, transmission color,and reflection color. I set these to arbitrary values. I'm sure you can make much better smoke than I can.
Go to Texture button. Add a texture. Select Voxel Data. Make the domain Cube.
Press F12 to render. You can go on to animating by selecting the video type (MOV, AVI codec, AVI uncompressed), and set the number of frames. Then click the Animation button (Wow, they spelled out the word in full), and wait.
I'm excited to see what kind of great smoke you can make. If you enjoyed this tutorial, don't forget to hit the big SUBSCRIBE button on Youtube. Happy Blendering.