First of all I want to express my thanks to everyone for the help.
Second, I have managed to find handwritten documents from Elgin, Illinois giving more clarification.
Thomas Smith was adopted by John Lovel of Elgin, Kane County, Illinois. His name was officially changed to Thomas Smith Lovel on 26 Sept 1868. At the time of this name change, Thomas had been a resident of Illinois for at least 11 years. Per his military discharge papers he was born in Manchester and not Lancashire England.
Based on this, I'm thinking the 1860 census with a Thomas living with John and Lucia Lovel is the correct one.