Why does the ggplot legend show both line colour and linetype?

Should work with the missing bracket and without the aes in geom_smooth per this reproducible example with made-up data:

library(tidyverse)

tibble(x = rep(seq(2, 16, 1), 2),
       y = abs(rnorm(30, 10, 10)),
       colour = rep(c("fore", "hind"), 15)
) |> 
  ggplot(aes(x, y, colour = colour)) +
  geom_point() +
  geom_smooth(colour = "blue") +
  theme(legend.key = element_rect(fill = "white"))
#> `geom_smooth()` using method = 'loess' and formula 'y ~ x'

^{Created on 2022-05-04 by the reprex package (v2.0.1)}

First you should set show.legend = FALSE in your geom_abline. After that you can use this code to set white background in your boxes in the legend: guides(color = guide_legend(override.aes = list(fill = NA)), linetype = guide_legend(override.aes = list(fill = NA))) . You can use the following code (ps I created random data):

library(tidyverse)
library(ggthemes)
ggplot(df_REM24, aes(x=lngini_eurostat, y=fit_augment)) + 
  geom_point(size=1.5, shape=16, alpha=1) + 
  geom_smooth(method="lm", formula = y ~ x, aes(colour="blue")) +
  geom_abline(linetype = 2, aes(slope = 1, intercept = 0, colour="red"), show.legend = FALSE) + 
  labs(x="Observed ln(Gini)", y="Predicted ln(Gini)") + 
  theme_few() + 
  scale_colour_manual(name='Legend',
                      labels = c("Panel regression", "y = x"), 
                      values = c("#0072c3", "#737373")) + 
  theme(legend.position = c(.15, .9), 
        legend.key = element_rect(fill = "white", colour = "black", size=0.3), 
        legend.title = element_text(face = "bold")) +
  guides(color = guide_legend(override.aes = list(fill = NA)), linetype = guide_legend(override.aes = list(fill = NA))) 

Output:

Data

df_REM24 <- data.frame(lngini_eurostat = sort(runif(10, 3, 4)),
                       fit_augment = sort(runif(10, 3, 4)))