So, there I am happily playing Galaxians when there is the most revolting smell followed by smoke from the computers underside; the computer did keep running.
Switching off, and removing the lid and it was obvious that the problem was in the switched mode PSU. I also recognised the smell; it’s quite distinctive.
The X2 capacitor that’s connected across the AC mains supply had failed. This is a really common problem in old PSUs.
The capacitor is usually a low value, 0.1uf in this case, and rated for 250v local mains voltage.
Fortunately I keep a small selection of these in my parts bin as it's a common failure and usually only a 5 minute repair once you’ve got the PSU out of the main chassis and dismantled.
Even though the PSU continues to work, this can be a sign that it may be time to overhaul the other capacitors. I removed each of the larger electrolytic capacitors (100uf @ 250v) and checked each one using an ESR & Capacitance meter. They were all well within specification which was good as I don’t have handy replacements for them.
Time to go parts shopping !!