Rodent smell surrounds retrograde animal sanctuary (7)
I believe the answer is:
muskrat
'rodent' is the definition.
(muskrat is a kind of rodent)
'smell surrounds retrograde animal sanctuary' is the wordplay.
'smell' becomes 'must' (term for a mouldy smell).
'surrounds' is an insertion indicator.
'retrograde' says the letters should be written in reverse.
'animal sanctuary' becomes 'ark' (as in Noah's Ark).
'ark' backwards is 'kra'.
'must' enclosing 'kra' is 'MUSKRAT'.
(Other definitions for muskrat that I've seen before include "Large aquatic rodent" , "Beaver-like rodent with glossy brown fur" , "Vole-like creature" , "North American water rodent - ark must (anag)" , "UK, smart? (anag)" .)