Apache Require IP directive not working
According to the documentation, the path in a <Directory> directive has to be a file system path, not an alias or variable. So I think your directive isn't having any effect, since there's no path {THUMBS_ROOT} in the file system.
Possible options:
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<Directory //mysmbserver/website/thumbs>. I don't know if this will work, but it might if Windows treats it as a valid file system path. <Location /thumbs>