I really hate 'Smile' too. At first, I tried to reload my Webshots desktop back on my computer, but it wouldn't let me reinstall it. So, I searched and found a program that converts Webshots pictures to regular .jpeg pictures. It works with all the pictures you have downloaded from Webshots.
Step 1. Download FREE program Ultimate Webshots Converter
http://sourceforge.net/projects/uwc/files/
Step 2. Locate the file Webshots Data (usually under Documents and Settings or in the Program Files)
Step 3. Open the program
Step 4. To convert just one file, go to File Open and select the .wb1 file you want to convert. Click Open. It will open the one file with save options at the bottom of the picture.
Step 5. To convert an entire Webshots album, go to Conversion and click Batch Conversion. Click on the + Folder button on the top right of the screen. Find the file path of the Webshots folder you want to batch convert. Highlight it and click okay. Repeat and choose as many folders as you want. When you are finished, choose your save settings on the lower left part of the screen, then click the Let's Convert! button and it will convert all the files from the folders you chose.
The .jpeg files can then still be used as desktop wallpapers via the conventional Windows or Mac method. I hope this helps everyone in our time of loss.
~J