a1181 smoking

Most likley your battery is shorted out. But the only way to know for sure. without taking it to the apple store to have it checked , is to try it on another macbook. It could also be the dc in board which is part of the mag safe connector. Battries will get warm but not hot when charging or trying to charge. And if in any way the battery is warped or deformed, that's a good sign it's bad.

There’s one problem with running your MacBook with the battery removed. MacBooks and MacBook Pros automatically reduce the processor speed by about half when the battery is removed.
http://support.apple.com/kb/HT2332
http://www.tomshardware.com/news/apple-macbook-pro-battery-benchmarks,6643.html

If you have a MacBook with the removable battery you can get a new third party battery fairly cheap on eBay.

Black Batteries http://shop.ebay.com/i.html?_nkw=macbook+black+battery&_sacat=0&LH_BIN=1&_sop=12 &_dmpt=Laptop_Batteries&_odkw=macbook+white+battery&_osacat=0&_trksid=p3286.c0. m 270.l1313

Or for $129 from Apple http://store.apple.com/us/product/MA566LL/A?mco=MTY3ODQ5OTY

The battery icon with the X in the middle means that the SMC needs to be reset. You pull the battery and unplug the magsafe, then hold the power button for 5 seconds. Then hook everything back up. If the battery is bad, it will most likely do the same thing. The X in the battery icon means the power system controls are bypassing the battery.And he's right, you need a charging battery to get full use of the processor. I still think it's the battery. bad batteries can make macbooks do strange things. Mine acted weird till I change the battery and it worked fine without it only alittle slower.