Okay, i tryed this one many times...and it kinda doesn't work the way it works on your old version...did i forgot something...the smoke doesn't look so smooth as in your version..
first i just tryed the way you explained it.but in PS CS3 ..the wave thing doesn't work..so i searched a little and found out that oscillations/vibrations is the new version of the waves in the older tutorial photoshop version...
Because this didn't work either..i played arround with the liquify-filter too...
my final picture looked like that:
[link]....i think it looks nice but it doesn't work the way you did it

.. practice or mistake of software ?..
greetz, TRW..