The studies about second hand smoke are inconclusive at best. However, if your child already has health problems such as asthma or allergies, I would be asking her to change shirts, wash her hands and pull her hair back before she touches the kid after smoking.
If she smoked inside, its not something you would miss. I can tell by just breathing if my BIL has smoked on the front porch... I have 2 kids and am working on #3. I have had life long breathing problems because of genetics. Not because my grandpa had a cigarette while he was watching me when I was little.
You don't want to lose a good babysitter because she has a habit you don't like. Be straight forward, but don't insult her intelligence. If you make her mad, she may just quit and you won't have to worry about it anymore.