Symptoms

K2 for SharePoint will not allow you to use a SmartForm for "New Item" in List Settings - the option is grayed out.
 

Diagnoses

This is by design. The reason for this is that New Document and New Item behave differently in the SharePoint API. We still create the forms in the event that users would like to upload items Outside of SharePoint
 

Resolution

It is recommended to use the "Edit Item" form instead to populate any metadata that would normally be included in the New Item form.