IntSmarty working completely (Finally and for now) 
Well I finally have the Intsmarty completly displaying the login page correctly. YEAH!!!
The problem was in the smarty_lang_prefilter. The code originally has the strings being replaced in the ISO-8859-1 character set (using the utf8_decode). But my page is in the utf8 character set (so it can be more flexable). So of course there were problems with the display of 2 character sets on 1 page. Once I removed the the utf8_decode it worked perfectly.
PHP:
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/**
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* hack starting here
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*/
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/** the line below is the original line of code
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*$content = preg_replace("!{$ldq}l{$rdq}$q_str{$ldq}/l{$rdq}!s",
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*utf8_decode($inst->translation [$hash]), $content);
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*/
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// here I am removing the utf8_decode because my page is in the utf8 character set
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$content = preg_replace("!{$ldq}l{$rdq}$q_str{$ldq}/l{$rdq}!s",$inst->translation [$hash], $content);
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/**
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* end hack
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*/
