Wool is naturally antibacterial, so it shouldn't smell at all--it takes A LOT for it to get stinky. If it does, it probably needs to be washed and your diapers probably need to be stripped.
As for lanolizing, It's really not hard at all. However, I don't like the Lansinoh sink method--no matter how hot the water is, it always stays gloppy and I have had brand-new covers end up with greasy lanolin stains when I've tried it that way. I love, love, love the Sudz n'Dudz organic wool wash, which has lanolin built right in so you don't have to wash and then lanolize--it's one-step, and you can also add an essential oil for scent. I also love the wool wash bar for treating spots and stains without having to relanolize a whole cover. She also has spray lanolin and lanolin balms.http://www.sudzndudz.com/