For what it's worth, I brew all grain with an 8 Gallon kettle. With some kettle de-foamer it's really a non issue for almost all 5 gallon batches. Your typical boil volume should only be around 6.25-6.5 gallons assuming a normal boil off rate.
I batch or no sparge. Check out dennybrew.com or brulosophy.com for tips and techiniques for both of these methods respectively.
Use the above suggestions in beersmith and try to break it down in your head to double check it. I.E. if you are making a 5 gallon batch you'll probably be shooting to boil about 6-6.5 gallons. Grains will soak up water during the mash only. Both mash and sparge amounts will be NEAR 4 gallons (8 total with some grain absorption), don't sweat a few quarts in either direction. Beersmith is pretty accurate most of the time. By checking "use equal running", it will try to calculate a thinner mash so that you would end up with roughly 3.25 gallons run-off from the mash and the sparge each to give you your pre-boil of ~6.25 to 6.5 gallons.
DONT GET HUNG UP ON MASH THICKNESS. Shooting for 1.25 or equal running is a good thing to do, but not really necessary, and certainly not worth worrying about. I 've used as low as 1 and WELL over 2 with a no sparge.
QUICK TIP. If your kettle doesn't show volume markings, fill it one gallon at a time and use an old long wooden kitchen spoon or other dip stick and mark at each gallon as you go, up to 7 gallons. This can be used to measure out what you needs for your mash/sparge. That's what I do. As long as the batch is around 10lbs of grain give or take a pound or two, I mash in with 4-5 gallons, and heat up like 5 gallons of sparge water while I wait and put it in a bucket. I then run off into the kettle, and measure with the spoon. If I run off 3 gallons, I know I need 3.5 more to get to 6.5. I then use a pitcher and pull out my 3.5 gallons of sparge water from the bucket and ad it to the mash tun for a batch sparge, the rest gets used for cleaning. Easy peasy.