Product Defect.
Smart Cleanup is looking for information in msdb.dbo.backupset table and msdb.dbo.backupmediafamily table for backups matching the clean up criteria to be deleted.
However if the database was created by restoring from a database backup file, SQL Server will store the information of this backup in msdb corresponding to the created database. Once the clean up criteria is match (say backup expired after 7 days), smart clean up would perform the deletion of the original backup file.
Status:
Issue fixed in version 7.5.3. The latest version of LiteSpeed for SQL Server can be downloaded here.
