Smudge problem

What is the image size in pixels?
What is its bit depth? i.e. 8 bit, 16 bit, 32 bit?

What is the smudge tool cursor size?

Have you tried on another image?

On top of what Dave has asked, this is a situation where your System Information might be helpful.

Open Photoshop and go Help > System Info > Copy and paste to this thread.

Which version of Photoshop are you using and how much free memory do you have when using the smudge tool (check in task manager)?

Dave