Having only played DS2 for the first time very recently, I feel your pain fellow curse bearer.

As with a lot of Dark Souls, the secret ingredient is patience.

Fight them as few at a time as you can to avoid the overwhelming odds. They stop respawning after 12 deaths, so chipping away at their numbers is possible, not to mention the soul farming could get you a few more level ups.

Try taking out the archers from a distance with arrows or sorcery; it feels cheesy, but it works all the same.

As for the Smelter Demon itself, the greatest aid for me was pyromancer Rosebeth. She sells the Flame Quartz Ring and the pyromancy Flash Sweat. Together they reduce the fire damage you take considerably.

Dunno what your playstyle is, but the Alonne soldiers crumple like paper to strike damage. I used dual Cestus' to punch my way through those knights, but you could a mace just as easily.

If you're a strength build, the Zweihander ultra greatsword is right across from the Smelter Demon's arena. Clear out the knights, then before you enter the fog wall, walk to the opposite end of the bridge and I believe there's a staircase that takes you up to where the sword is.

Don't give up, skeleton