Is it possible to edit the contents of a smart object without opening it in a new window? I need to be able to edit it as if it were a regular layer in my project, instead of having to edit it separately and then return to what I was doing.
Unfortunately and as far as I'm concerned: No.
Smart objects are the equivalent of a file that can open in Photoshop or Illustrator. They are always opened as a new document.
As a temporary fix, if your object is not too big and you are only using it once, you can drag the layers to the document, edit them and turn them into a smart object again.