Combining layers to Smart Object causing layer styles to change?

Question

I have an array of layers in Adobe Photoshop CC 2015. They have effects on them such as outer glows with varying transparencies.

When joining into a Smart object, the outer glow's and drop shadow's turn white instead of maintaining their transparency effects.

My layer screenshot below is showing all my layers. The ones that are highlighted are the ones I'm converting to Smart Object.

My question is... Why would the layer effects behave differently once merged into a Smart Object. I thought that was the entire point of "Smart" Objects and that they understand their context and are content/context aware.

BEFORE SMART OBJECT

AFTER SMART OBJECT

LAYER SETUP BEFORE SMART OBJECT

Answer 1

Something I would personally do (because I'm not sure why it would be doing that), would be to copy the layer style to a dummy layer, create your smart object, and reapply the layer style to the smart object which you can now adjust if you need to and it isn't baked on!

Answer 2

What is your outer glow blending option? If it's screen as default it tries to apply this blending to transparent background within smart object (or am I wrong?). For example - the normal blending mode is not affected.

If you need, you can turn the object to smart object and then apply the effects on it... or leave the layer as it is if you don't have to.