To say that "there can be no free market in the absence of regulation" is equivalent to saying that there can be no free market, period. A regulated market, by definition, is not free.
Despite all his insights, Adam Smith contradicted himself on many points, including on the subject of regulation. Fortunately, we are not bound by his mistakes. The early pioneers in any field tend to get many things wrong, and it's nothing to be ashamed of. Those who come after will naturally keep the best parts and discard the mistakes. The idea that the market requires regulation is simply one of those areas that Smith got wrong. He couldn't see how certain problems could be solved while keeping the market free. However, others who later built on his work were able to find better solutions and do away with those inconsistencies.