Hello Colin,
This is a bug in Indigo and thank you for providing this bug report.
Tomorrow we will release an updated version with this bug fixed and
with some new functions.
As a temporary solution you can fold hydrogens before calling
item.smiles():
item.foldHydrogens();
item.smiles();
Or if you need explicit hydrogens:
item.foldHydrogens();
item.unfoldHydrogens();
item.smiles();
With best regards,
Mikhail Rybalkin