Faith because of Science, how the smoke monster was created by lovechia

The Island´s powers are based on electromagnetic energy which can be found all over the Island.

When the First people came to the Island, they found their compasses spinning around like crazy at certain locations of the Island. They also found their illnesses miraculously healed when residing at those special locations.
They deemed it supernatural. Or that God would reside on this Island. They didnt know it was all based on Electromagnetism.
Faith because of Science.

These special locations can be accesed by wells which are scattered all over the Island. Like The Frozen Donkey Wheel Chamber which harnesses the Electromagnetic Energy in the Cave when the Wheel is turned, thus harnessing another one of the Islands properties: Traveling through time.

Now the Smoke Monster comes into play.
The Man in Black once fell down one of those wells and was shrouded of the Electromagnetic energies. Somehow, his body proved fatal to those energies, instantly killing him, but the Electromagnetic Energy created a Smoke Monster instead when his ghost was fused with that Energy.
Thats my theory on how the Smoke Monster was created.

The reason why he must be kept imprisoned on the Island is obvious. Jacob as the protector of the Island knows how to channel the energies of the Island through his hands. As he didnt know how the Smoke Monster could be destroyed he decided to imprison it or the Man in Black for that matter, instead.
Jacob himself is immune to Electromagnetism, just like Desmond, which is why MiB cant harm Jacob, or Desmond.
Because also when he copies the appaerance of someone he is just a being of electromagnetic energy which is undestroyable.