The Special Counsel appointment hasn’t been brought before the Supreme Court so the arguments for and against it haven’t been decided. When district and appeals courts have different opinions on laws they usually get decided at the Supreme Court. Judge Cannon decided that two problems were at issue with Smith’s appointment. First, he had never been confirmed as a Principal Officer, as all the other Special Counsels had, and second; Congress had not appropriated the money to pay for his office.
Judge Cannon has significant support for her decision, from law professors, to two former U.S. Attorneys General, to Supreme Court Justice Clarence Thomas. Thomas wrote in the Immunities decision that before the court worried that the President had immunity, it needed to verify Smith’s authority. She did, and now it’s up to Smith to prove he’s authorized to bring the case. To better understand this case you may want to familiarize yourself with the Constitution and the definition of Principal and Inferior Officers. And the Appropriations Clause.