You won't damage the cartridge. At the MC setting on the phono stage, the phono stage is supplying more gain to the signal as it delivers that signal to the rest of your system. This has no back effect on the cartridge.
If I correctly interpret the specs that I see on the web for the SmartPhono, in the moving magnet position it applies a 47K load to the cartridge, and in the moving coil position an 800 ohm load. You won't hurt the cartridge either way, but given that the cartridge is designed and specified to work into a 47K load, the moving coil setting is definitely non-optimal sonically.
I don't know specifically what the sonic effects of loading the cartridge with 800 ohms would be, but I'm sure you would ultimately find that they wouldn't be good.