There can be many different contexts to what happened that has made her a living liquid container.
1. She was transformed by a spell, magic, curse, pendant, whatever sort of TF-item or trigger in the textbook of transformation that has the Dragon's body becoming more conical with the legs beginning to compress themselves into her waist, while her feet began to flatten out into a flat bottom for her to stand upright on. Her arms would also sink into her torso too, form stubs to completely nothing as her wings would take their place now, still intact but were now the arms instead of back appendages like normal. Her head would also begin to melt into the hollowing out and rounding torso which began to make a large hole in the middle to make way for holding liquids as her facial features like snout, eyes and cheeks grew immensely with her underbelly color now moving down to the lower area, losing all scute lines in the process while her upper orange became the top painted part.
Her horns would then grow out to touch each other on the tips before fusing together entirely, becoming cylindrical and arched to become a convenient handle for any creature to hold onto, though she did retain her spikes which was a nice touch and added to the draconian look of her new self…She was now a living bucket…with wings, a muzzle and all made out of tough flexible metal! with her tail now coiling around above her hollow head and becoming a magenta rim on the brim, She would begin to hop around, may as well get used to it while some friends search out for a cure! Maybe take some lava home for Twilight to study!
2. She is a ghost from a previous event that has made her a spectre that was capable of typical ghost powers…but the prominent one was possession…and finding a bucket with spiked curiosity and mischievousness she would dive into it and let her body just absorb the bucket like a sponge. The bucket laid dormant for a while; But now for long it began to shudder and hop around as the Dragon's colors began to paint over the converting metal which began to become more lively and malleable than ever before, spines jutted out of the thickening creamy handle with the brim rim becoming a magenta color much like her hair and tip of her tail. Wings would sprout out from the sides with a creak each as her cheeks, eyes and muzzle manifested on the front, now fully possessed and merged with the bucket entirely. Now Smolder was a cute bucket. She was ready to pull some nice pranks or help out her friends with some liquid gathering!