Check out Mesh>Cleanup. On the first run, its probably a better bet to set operation to select the matching polygons so at least if there are problem areas you can take notes on what to avoid. Then you can run it again but in cleanup mode instead of select, or manually go in an edit the model, up to you. It's a good habit to check the mesh integrity anyway.
I really have no idea why it does this. I even tried deleting the faces that the cone seems to come out of followed by fill hole. And when I smooth it there are multiple cones coming out of the smoothed character from the eyes and mouth. None of this shows up in the smooth preview.
Also quick question, if I don't figure out how to fix it, should i just use the unsmoothed character for my animation?
Since I am wasting time waiting for a solution anyway, should I start texturing>rigging or should I wait till after the smooth?