The processes involved in preparing the tissue for embedding in paraffin wax (especially formalin fixation) causes extensive cross-linking of both proteins and nucleic acids as well as oxidation of the DNA strands. Both lead to dsDNA breaks (hence your smear).
Hard to do quantitative DNA work, but qualitative should be fine.
For PCR work, get your amplicons as small as you can get them!
Formalin fixation causes a lot of double stranded breaks in DNA. If you're trying to amplify sequences for detection or for cloning, you'll need to use several primer pairs to amplify shorter, overlapping amplicons first.
actually, i assessed the quality of extracted DNA by PCR amplification of the β-globin gene using the primers PC04 (5'-CAA-CTT-CAT-CCA-CGT-TCA-CC-3') and GH20 (5'-GAA-GAG-CCA-AGG-ACA-GGT-AC-3'), which gives a fragment of 265 bp. but I had negative results (the positive control was positive).