I cant really speak to the smell though it sounds like you already have that taken care of. I have had some slight vertical play in Axis lock mechanisms though it is usually not detectable in normal use i.e opening your blade and cutting something. The only time it is noticeable is when you open it up and start pulling up and down on the blade to check to see if it is there. I totally get that this knife owning thing is not all about function and there is some aesthetic pleasure we get from solidly locked up folders.
My suspicion is that this is coming from a combination of either needing a break in, or in some of the cases that I have found it is because of relatively weak omega springs. Essentially the omega springs are not forcing that lock bar hard enough and far enough into the cutout in the blade tang. To check for this, after locking the knife open press the knife back into the stop pin fairly hard, and at the same time with your other hand push UP on the lock bar (as if it was being pushed upwards into locking position by very strong springs.
If that takes care of the play like it does on my Benchmade Mini Loco, than the issue is probably that the springs arent getting the lock bar up in the cutout with enough authority. Its not a huge issue insofar as safety is concerned. If it does bother you though you could either send it back to Benchmade customer service and see what they can do with it, or make your own springs. I have made a few of my own using .025 inch memory wire that are far stronger than factory springs.