This happened a month ago: I had just received the Smile boxset!
It was quite large: it came in a wooden crate, probably 50in*50in, with 2 vinyl discs, a dozen CDs, a few photographs, other stuff that I can't remember, and TWO books, one was a paperback, the other a hardcover, but they had the same content, and they weren't just about Smile, but about the entire BB story... About 1500 pages
I also dreamt I was listening to the CDs, I distinctly remember they weren't Smile tracks, actually I had never heard these pieces of music before, so they must have been something I invented in my sleep
They sounded very good but sadly when I woke up I couldn't "recreate" them (this happened before, in a previous dream I was with Bach, he was playing the harpsichord and I was playing the piano, and "we" came up with something great... That I couldn't remember either)
Back when I got my first taste of Smile material, way back in the olden days of 2001, I was but a mere 17 year old kid. The Smile material was one of those musical experiences (others include Days of Future Passed, The Dark Side of the Moon, The Doors, Are You Experienced?, Kind of Blue, Ligeti's Atmospheres, Bach's Mass in B Minor, The Second Annual Report of Throbbing Gristle, Dreamies, Haackula) that opened up vast catacombs of wisdom and thought in my young mind. I remember finding the music frightening in the best possible way. I wouldn't say it gave me NIGHTMARES per se, but it definitely made me look at music differently. A lot of my views on Smile are based on those early listens. This is something that I felt BWPS lacked - the eerie, malevolent sound. The sound that was going to scare a lot of people.
My first encounter with Smile is remarkably similar. I remember "Fire" and "CIFOTM" were especially frightening, partly due to the bad sound quality. I don't really know how to describe it, but the songs had some sort of "came from six feet under" quality. Listening to the songs at night in complete darkness was really a one-of-a-kind experience, that I haven't been able to reproduce because I now know the songs too well. But the effect these first few listens had on me is forever linked to Smile.