Smoke smell, plus some other problems on the arduino

Interesting. I need to take a look at the Arduino schematic, especially as I'm planning on building my own ATmega328 MCU at some point. As for your second point, I feel like I read this somewhere but I can't remember where.

Anyways, the verdict is that OP should remove the +5V to VIN connection, yes? I will go and edit the "tutorial" post now.

@luaykotb, feel free to continue with your project, and I hope it goes well!