Opera Sucks

For this method, all you have to do is gain control of the large opera singer, take her to the Air Exchange Room, and use her ability to suck up all of the smog.

Override Up High

Use Charlie to head into the fan service room and stack into one of the small engineer dolls.
Turn around towards the door and use the engineers ability on the object with the wrench to open the door.
Stack into the kid with the balloons and use his ability while on top of the vent inside the fan service room to fly up to platform where an engineer is standing.
Stack into the engineer and use his ability on the object above to fix the fan and remove the smoke.

A Blast of Sweet Air

For this first method, look for a doll that is dressed in pink and occassionally emits a flowery purple cloud.
Stack into this doll and take her into the Air Exchange room, which is next to the Fan Service room.
Walk up to the cloud of smog and press "A" to pass potpourri and freshen the air.

Bun in the Oven

Across from the Fan Service room is an emergency room with a hazmat suit.
First, stack into an engineer. Next, stack into the hazmat suit and head into the Air Exchange Room.
Walk past the smoke, then stack out and use the engineer to fix the console and get the fan going.