Smith, who competed at the last two Olympics and is the British 400m indoor record holder, intends to quit athletics after only being given a grant of pounds 2,000 from the sport's Lottery Fund.
But Arnold admits that Smith seems "immovable". He said: "I said that running for her country was the one chance she has of making a mark in life and she was throwing a lot away.
"She has just not allowed the due course of action to go on and I am sure that if she had hung on a bit we would have been able to do something but she seems quite adamant in her course of action."
Smith pulled out of the British team for the European Cup in Munich because of the grant, and was yesterday followed by Birchfield Harriers' Lorraine Hanson. The 400m runner has an injury problem that has prevented her taking a place in the relay squad.
In the United States, Mary Slaney's position after her suspension for a positive drugs test was causing some confusion.
Slaney's lawyer, Jim Coleman, said he had received a letter from the national governing body saying its original suspicion that she allegedly tested positive for high levels of testosterone was incorrect.
"It's now a year and they can't tell us what's she's done wrong," Coleman said, noting that Slaney's so-called faulty test was administered at the 1996 US Olympic trials last June. "They keep changing the rules, they keep changing the plot. How is she supposed to defend herself if they haven't told her what she's done wrong?
A Track and Field source, who spoke on the condition of anonymity, said USATF's five-member drug custodial board had suspended Slaney late on Tuesday night.
The suspension means that Slaney will not compete in the national championships, which began on Wednesday and will now be unable to earn a place on the US team for the World Championships in Athens in August.
- More about:
- 400m Race
- British Cycling Federation
- Foreign & Commonwealth Office
- Track & Field