When closing the smart object if you get an error saying “could not update the smart object files because the file could not be found” follow these instructions. This guide is for the 5K T- Shirt Mockup I created but will also work for my other mockups using displacments.
Step 1: Look for the layer that says Design (Edit This).
Step 2: At the end of that layer you should see an arrow.
Step 3: You should see something that says “Smart Filters”. right below that you’ll see the word “displace” Double Click on the word.
Step 4: a dialog box will appear like this. Leave the setting as is and hit ok. Now locate the “displacement.psd” file.
Once your done the smart object should be correctly displaced. Enjoy the mockup.