"Smoke/steam (smells burned) is coming from behind the engine and when the wheels are turned, it sounds like a high pitched grinding noise."
Are linings the hoses/lines to/from the power steering pump ? Could be that one or both are leaking fluid onto hot exhaust components and burning off.
It could be that a coolant line running to the heater core behind the engine is leaking and creating steam, for example.
How much has the vehicle been operated after the pump replacement ? Was it quiet at first and then noisy or noisy from the git-go ?
You will have air in the system after refilling with power steering fluid and it will be noisy. The steering has to be cycled a few times and the vehicle allowed to sit a half hour or so, making sure the fluid is up to "full" mark and the process possibly repeated a few times to get the foam and bubbles out of the system.
You shouldn't be running water in the car. Water boils at a lower temperature than coolant/antifreeze mix. You shouldn't be operating this vehicle until the source of the steam/smoke is found and fixed. It could totally damage the engine (if it's not already) and/or cause a fire or burn somebody.