Possibly overlooked source of smoke - burning? (8)
I believe the answer is:
slighted
'possibly overlooked' is the definition.
(overlooking someone might be slighting them)
'source of smoke burning?' is the wordplay.
'source of' says to take the initial letters.
'burning?' becomes 'lighted' (set alight).
The initial letter of 'smoke' is 's'.
's'+'lighted'='SLIGHTED'
(Other definitions for slighted that I've seen before include "Offended" , "Gave the cold shoulder to" , "put down" , "Insulted with delights" .)