This is a little late, but I cleaned out a vintage lamp here and it had the same smell. What you're smelling is actually the stuff in the lava (smell leaches through the water a little).
I poured my old water out and refilled it with water and balanced it with epsom salts and it worked fine. ... I still ended up dumping the lava too because it was also dirty (someone had opened the lamp up and left the cap off for a while), so I ended up just replacing everything in there. ... BUT, it did work fine after I replaced just the water.
I've replaced the liquid in an old Lava Lite lamp. And yes, old fluid smells awful. However, I believe Scucci is right - the smell leaches into the liquid from the wax. I've tried to fix my liquid 3X in the old lamp and each time I removed the fluid, it had that smell again, even thought I started with distilled water and epsom salts.