Wouldn’t it be nice if we could actually respond, “And you’d look so much better if you fucked off and left me alone!”.
What’s stopping you? Of course you could just say something like “I’m trying but my parents were just killed in a plane crash”. That ought to shut them up.
I wouldn’t lie just to make them feel bad when telling the truth works just as well: “When the lips come back from the teeth, don’t assume it’s a smile.” (/snarl)
But generally I’m just too damned pleasant for my own good… so I smile, and they think ‘Hey, that works!’ and then they do it again on some other poor sod.
I’m a ‘Smile!’ enabler, and this makes me unhappy. 
I don’t mind it either way. It’s a clear way of saying, “I’m getting a signal that you’re attracted to me that I’m not sure is correct. Just in case it is, I am going to tell you that I’m not available in a way that I hope doesn’t hurt your feelings.”
Something clicked for me there.
Not available is not the same as not interested. Its not available. It doesn’t mean “you are disgusting,” it doesn’t mean “not in a million years.” There could be that back there (particularly in the making up the boyfriend to get out of the awkward situation scenario), but in some cases women do this to protect themselves…their thoughts are …
“This guy is really hot. If I didn’t have a boyfriend, I’d go out with him in a second. In fact, if he asks me out the temptation might be too much. Or I’ll throw that hesitation that makes things really awkward. Better make the proactive move so I’m not tempted…”
“My boyfriend and I saw that movie last week…”
Yikes.
And yes, I am constantly told to smile by men I don’t know (yet know me well enough to assume I shouldn’t worry my pretty little head about anything). I’ve discussed it with guy friends and, while they get it, too, on occasion, it’s never from strangers.