You can't go far wrong with a decent compilation album if you're introducing somebody to the Smiths or Morrissey for the first time.
I agree that 'Louder Than Bombs' is probably the best proper Smiths compliation, as it covers their whole career (which 'Hatful of Hollow' and 'Louder than Bombs' don't).
Insofar as a Morrissey compilation album is concerned, I don't think you can beat the U.S. 'Best of Morrissey' import. If you don't want to splash out 10 or 12 quid on that, the U.K. 'Suedehead' best of compilation is decent enough.
However, if I had to pick non-compilation albums to introduce someone to the Smiths and Morrissey for the first time, I personally would go for 'Strangeways' and 'Your Arsenal'.