Thanks for the info. I’m now able to reproduce this.
I also found another workaround that is a little easier:
If you run “legato stop” to stop the Legato runtime, then run “legato start ; appCfgRemove sms”, it should get you back in action.
…
Looking at the code, I see the bug. The Supervisor is forgetting to terminate its configuration database transaction (by deleting its iterator) in the error case when it fails to start an application.
At line 424 of framework/c/src/supervisor/supervisor.c (in the “Start the app.” part of the function “LaunchApp”), it should call
le_cfg_DeleteIterator(appCfg);
I just tested that change and it works for me. 
So, you can patch that up in your own copy of the code for now, and I’ll make sure the fix gets into the Beta release.
Thanks again!
–Jen