Are you saying all ports are now populated only by soldiers? Which period are you playing?
Port Royale and St. Pierre are supposed to become naval ports, so the port areas are filled with naval uniforms, but only in later periods. In "Golden Age of Piracy", which is the default period for a FreePlay game, those ports should still be populated by civilians. And when I play, they are. If you're seeing lots of naval personnel in "Golden Age" or earlier, or in any ports other than those two, something very odd is going on.
I'm not generally interested in smuggling but did try it once, with a FreePlay game as a smuggler character, just to see how it worked. I'd talk to a soldier in the tavern, bribe him to tell me when patrols were less likely, then went to the beach at that time. Sometimes there was a patrol of soldiers anyway, but if I was quick, I could run to the boat before they got close enough to fight. I almost never had coast guard ships - once, maybe twice, during the whole game.
So something seems to have gone badly wrong with your install. I suggest reinstalling from scratch - start from CD, then use the 31st August installer plus the zip update which are linked in the first post of this thread.