What should I do if I am working on a manual email in a transaction, and the Smart Blocks and Smart Block Groups "code" copying over the div marks or the HTML format?

From the Emails tab in a transaction, open your Merge Fields.
Go to Smart Blocks or Smart Block Groups, and please read the Important Note that says,

3. Click one of the smart blocks or smart block groups to copy to the clipboard and instead of directly pasting the smart block content in the body of the email, click the “< >” (source code) to view the message content.

4. Paste the copied smart block content into the source code and click Save. When you get back to the body of your email, the smart block content will be properly rendered.