I am turning Misha's comment into an answer, so this is not left unanswered under this tag.
The current question is:
Is it possible that irreducible $\rho$ is not smooth (reduced) if $\chi_\rho$ is not smooth (reduced)?
Here is Misha's answer (which I agree with):
$\mathfrak{X}^{irr}(\pi_1(M), \mathrm{SL}(2,\mathbb{C}))$ is smooth (reduced) at $\chi_\rho$ if and only if $\mathrm{Hom}^{irr}(\pi_1(M),\mathrm{SL}(2,\mathbb{C}))$ is smooth (reduced) at $\rho$.
Here is a comment from me:
It is possible for singular points in $\mathrm{Hom}(\Gamma,G)$ to be smooth in $\mathfrak{X}(\Gamma,G)=\mathrm{Hom}(\Gamma, G)//G$. Take for example a genus 2 surface group $\Gamma$ with $G=\mathrm{SU}(2)$, then $\mathrm{Hom}(\Gamma, G)/G\cong\mathbb{CP}^3$ but there are singularities in the $\mathrm{Hom}(\Gamma, G)$ (coming from reducible representations). Worse, even for free groups there are Lie groups $G$ of arbitrarily large rank with the
property that $\mathfrak{X}(F_2,G)$ has smooth reducibles and singular irreducibles for a rank 2 free group $F_2$. See here and here for more information.
One should also read Misha's great answer to a related question here.
Tangentially related are the answers here.