To have smilies or even the full array of options and edits in Quick Reply, go to your Profile, Modify Profile, Look and Layout.
Scroll down to "Choose Quick Reply Type:" and choose any option but the first one.
For some reason the first option doesn't play nice with quoting a post.
I just set the default to Non-WYSIWYG (with bbc buttons and smilies). If you want less, you can go into your profile and choose another option.
It appears the top option (WYSIWYG (with bbc buttons and smilies)) only has the quote issue on Chrome, so users with other browsers can use that option if they would like.
Thanks. Maybe the change you made fixed it for me (that is if mine was simply set to <whatever the default is>).