this is old english, it means 'would you like a smoke (cigarette)?

yes you two are right, please excuse my misuse of the term "old english" i should have said out-dated (which is true for my region). thank you for the correction :)

It is definitely NOT old English! Fancy a smoke was not used in this way in olden times. It is VERY common here in England to ask someone if they fancy doing something. It really means "are you in the mood for something?" ' Fancy a smoke?' means 'do you feel like a cigarette?' You are probably NOT offering one! For example, at work it is time for a break, your friend says, "do you fancy a coffee and a smoke?" You say, "Yep." And so the 2 of you go off to find a suitable place to have a coffee and a cigarette. Other things you could fancy... chocolate cake, a person you find sexually attractive, a nice holiday... anything! And you can use it as an adjective so you could fancy buying that fancy party dress.

I disagree that this is old English (which is technically another language) or even outdated English. People say this still, just not in the U.S. My understanding is that the word "fancy" used in this way is fairly common in the U.K. Anyone from there want to chime in? In U.S. English, we exclusively use "fancy" as an adjective.