How can I set the default values used in making spawners:
SmartSpawning = true ?

in XMLSpawner2.cs I changed line 124 to true and line 250 to true but that didnt seem to do it.

I would recommend using [xmladd to place spawners. That way you can set the defaults to whatever you like, individual staff will have their own defaults, and you can load in different default configurations for different conditions.