I mean, there is a certain dividing line in my mind when it comes to sexual creations by my friends. Obviously part of it has to do with the nature of the relationship. If I saw you as say, a sibling figure, that'd definitely be a weird experience. But if you're say, "my friend into the weird stuff" then it's not such a crazy leap.
The other part of that little e equation is just the setting. I'm not so concerned with actual content, but there are definitely worlds and characters I consider more sacred than others. It's obviously a very personal metric there, and basically deals entirely with how personally affected I was by the original. For instance, it's whatever when it comes to Bleach. I mean, I loved me some Bleach, but it's popcorn entertainment. FMA on the other hand got me in my soul. Yah don't **** with FMA in my book.
So I hope that explains my position on the fanfic smut question. Although if there is one hard and fast rule: I do not want to read your self insert smut. We all know what it's about at that point, and it's not for general consumption.