I have the quest up to the point where all I have to do is throw the smoke grenade. Now it's in my inventory but I cant equip the smoke grenade, when I do equip it doesn't go into my hand when I try to throw it I just end up swinging a a punch . Anyone having this problem and is there a way around it > Any help would be greatly appreciated.

Seems like I cannot equip mines either.

heh..Hold down your bash key to throw explosives.

this

You can actually have grenades AND a weapon equipped at the same time.