I have an old basic electric guitar and a fender squier strat. The strat has got a lovely smooth fretboard, feels great for slides & bends and generally very slick. My other one is very 'dry.' It's also scratch when I bend or slide and just not smooth like my fender's.

What can I use to smooth the neck out? Possibly a varnish or polish of some sort? Advice please
Well if you are having problems bending, the bigger problem is your frets.

Best bet would be to grab some very high grit sandpaper, 1000+, and lightly go over each fret to get the dings and scratches out. You can also sand the fretboard with this stuff too, and it shouldn't go through the finish.

You can finish up simply with buffing compound and a rag and buff it nice and slick.