Ive had this problem before but cant remember solution...
I have combined and merged a poly character head on a poly character body, the problem is that the merged line of mesh has not become smoothly connected leaving a sharp corner...all vertices have merged correctly and are equal,the normals seem fine etc..
any help greatly appreciated.
If not select the object and check your normals by going to:
Display -> Polygon -> Face Normals.
Now all your faces will have a line sticking out indicating the normals. So you can check if they are all sticking out the right side(which is outwards). If not, correct by selecting the faces you need to correct and going to: Normals -> Reverse