When a Smart Bone Action is active, some things can be over-ridden during animation. For example: Point animation and bone/layer transforms. Unfortunately layer order is not one of them.
It's for this reason I often recommended against animating layer order inside a Smart Bone Action. It's better to use multiple copies or instances of an arm or leg layer and then use visibility keys in a Smart Bone Action to change the visibility of their order. This also leaves you the opportunity to (manually) use Animated Layer order in
addition to the visibility sorting when you really need it.
Personally, I would not put the stacking order animation in a body turn. It's better to make this a separate control (I usually call this z-pos,) so you can move the upper and lower arm sections individually as you need them. This is useful when a character needs to reach in front of or behind their body while standing in any angle. To see an example of this, look at my old Puss In Boots rig at the beginning of this video:
Puss In Book
BTW, the Puss rig uses yet another method for changing the stacking order. It still uses multiple layers for each arm region but I use mask to reveal the arm sections in each layer. The mask is a curve that follows the length of the arm with a thick stroke applied, and then I use Stroke Exposure in a Smart Bone Dial to reveal/hide different sections of the arm. This worked well for this rig but in practice I decided it was over-engineered because simply hiding and revealing fixed layer sections worked just as well.
A couple more tips: You can create a separate Smart Bone Dial for each arm, and each arm dial can control up to 4 possible stacking positions (FF, FB, BF, BB.) Sometimes I like to use just one dial for both arms because there really aren't a lot of of stacking possibilities to dial through (maybe 16?,) and a single dial takes up less screen space. Be sure to use step keys on the dial and enable Use Previous Key as your Default Interpolation.
For simpler rigs or when I'm just in hurry or feeling lazy, I don't bother with any of the above. It's easy enough to just enable Animated Layer Order and move layers up and down in the Layers Window as needed. IMO, why complicate something that's already so easy to animate?
I hope this gives you some ideas.