When Wallace and some other Scottish guys set fire to that English hut with the soldiers trapped inside, the Scots pour oil over the hut to act as a fuel. They then set the oil on fire, but the smoke produced is white, but everyone knows that when oil burns that thick black smoke is produced.
Actually, Mel Gibson comments on this more than once in the film's commentary. He says that what they used wasn't meant to be oil. He says that he did not know of a flammable substance that was used during the time period but that one must have been present. (As many things required somekind of fuel) So he simply made use of this "unknown substance" with the black liquid seen in the film.