The smite evil in-play adjustment for paladins is stacking with other deflection bonuses. Deflection bonuses do not stack. In this case the only the highest deflection bonus should be applied.
Re-create:
Create Paladin character with at +1 Charisma bonus
Add a ring of protection +1 => AC has the +1 (deflection)
On the in-play tab, check the Smite Evil: activated check box => Deflection bonus now shows as +2 (deflection) instead of staying at +1 (deflection)
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