"Bad" in both places is an adjective.
In the second usage, it's a predicate adjective because "smells" is serving as a linking verb.
If you don't understand this (and it isn't easy!), let us know.
The only bad thing is that she smells bad.
In the above sentence, I think bad is an adverb because it describes the linking verb, smells. The dictionary lists bad as a verb. Is it an adverb or verb and why?
Thanks.
2 answers
After verbs of "sense" : looks, smells, sounds, feels, tastes, the following descriptive word is an adjective. The reason is that it is describing the subject... Look at the below.
The rose looks beautiful.
The rose is beautiful.
Rose <- beautiful.
Lemon tastes sour.
Lemon is sour.
Lemon <- sour.
Adverbs tell when, where, how usually.
The rose looks beautiful.
The rose is beautiful.
Rose <- beautiful.
Lemon tastes sour.
Lemon is sour.
Lemon <- sour.
Adverbs tell when, where, how usually.