Iam assuming they would get VApay at full 100 percent due to S-1 SMC S-1
This statement seems to be the beginning of your confusions.
SMC is for VA compensation above the 100% rate. (except K). Instead of looking at the normal 50%, 80%, 100% rate charts, you look at the SMC charts for your monthly compensation. SMC codes are sometimes stepped. There are multiple rates between N and O, R and T. The letters come from the paragraphs congress wrote in the law authorizing the extra money. So SMC-S only has one step, but is sometimes written as SMC-S-1 for consistency with the other stepped SMC codes.
http://www.benefits.va.gov/COMPENSATION/resources_comp02.asp
The most common reason for getting an SMC-S is a single condition rated at 100%, plus additional conditions rated at least 60% together. Its also called housebound, because you can qualify for it by showing you can't leave the house (other SMCs you need to be missing or have unusable limbs, basically).
I underatnd if I were getting concurrent VA then SMC would be extremely less, but since I am not getting VA pay, but am eligible for SCM what would that look like.
This confusion is a little harder to clarify.
Bottom line, you are owed the 4425 in one form or another.
First step) VA pays out. Its tax free and better, so they will always (unless you request otherwise) max out how much you can get there. This is called waiving military pay to receive VA compensation. The basic laws say for every dollar from the VA, military retirement is reduced one dollar.
Second step) Military makes up the difference if VA is less than 4425. (and you pay taxes on that portion).
I am guessing the PEBLO's story is accurate, the SMC code was already accounted for when you were told 3400 from the VA. About 4200 overall should hit your bank account. Can't really confirm without knowing your dependents information.
SMC-S with a spouse is around $3400
100% rate with spouse and 4 kids is pretty close to $3400
Now the concurrent receipt stuff is confusing you. Concurrent receipt can add a third step.
third step) Military restores some of the military pay waived for receiving VA pay. They carved out some exceptions to the basic rules of dollar for a dollar. If you apply for, and are approved for CRSC (some of your other conditions might be combat related), then they may be able to raise your compensation. The rules for this are fairly hard to explain without an example, as it depends on what conditions, and their rating, are combat related. Bottom line, if combat, simulating war, hazardous duty, or military equipment caused your condition, apply, it's good