Sydney Smith is in the 1851 census in Kilmallie, blacksmith, aged 34. The head of the household is his mother Mary Smith, widow, and also in the household is her sister Sarah Kennedy.
So it appears that Sidney was the son of Mary Kennedy or Smith.
He would have been of an age to be the father of Jane Smith, not her sibling. Could Jane be the illegitimate daughter of Sidney Smith and Elizabeth McKenzie? This of course begs the question why her parents didn't take her with them when they emigrated.
Or maybe they left her with her grandparents until they got properly settled, and then sent for her to join them after 1861? Where did Sidney and Elizabeth go in Australia?
I see that Sarah Kennedy, aged 76, died in Kilmallie in 1862. Her death certificate should tell you the names of her, and therefore Mary's, parents. Have you got a copy of it?
Jane Smith is listed on the 1851 census District 73 of Kilmorack, and again on the 1861 census Districk 100 of Kilmorack
100 is the number used by Scotland's People for the parish of Kilmorack, so it's not 'Districk 100
of Kilmorack'. In 1851, according to both Scotland's People and FreeCen, she was in Kilmorack, parish No 100, enumeration district 2, page 6. In 1861 she was in Kilmorack, parish no 100, enumeration district 1, page 10. Where did 73 come from? That is the number of the parish of Knockbain, formerly Kilmuir-Wester and Suddy, in the county of Ross and Cromarty.