Shadow pass - terminator problem? BI. Simple UV sphere with smooth shading and Point lamp with raytraced shadow. Main render is correct, but Shadow Pass is blocky. Why?

Split view:
You're in luck, since you are Blender Internal. This can be fixed using the Shadow Bias sliders in the materials tab. It will recalculate the blocky shadows taking the smooth shading into account. Render times will be just a bit slower, but not by much.