There is an issue with railcraft with some things in minecraft. I believe it stopped me from being able to plant seeds once. It is also known to stop multiblocks from forming properly.
It is called tracking aura and it can be disabled by setting the block id of an item called "hidden" to 0 in the railcraft config
By the way, I was able to eventually plant my seeds after I had flooded the area with a bucket of water. Before disabling "hidden" , would you consider flooding the area where you are building your smeltery, for science. If it works after that it would be interesting.
At any rate, assuming you have set up the smeltery correctly getting rid of tracking aura has a good chance of solving your problem.[DOUBLEPOST=1372833330][/DOUBLEPOST]Also, make sure the faucet is on the right side of a drain. The big black hole faces into the smeltery, the little hole faces outside.