[MERGE] Fix #52578 smart-add should recurse all dirs

[John Arbash Meinel]

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The smart-add code had a small bug where we weren't recursing through
all the user supplied directories. It also had a small inefficiency
where it built up a list of dirs using FastPath, then threw that info
away, and built it up again later.

Anyway, the attached patch adds a test, and a fix.
It also cleans up some of the smart_add tests, which were creating a
'branch' reference, but never using it.

John
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