It is false. I'm not sure what the comment about algebraic spaces has to do with the question, since algebraic spaces do admit an fpqc (even 'etale) cover by a scheme. This is analogous to the fact that the failure of smoothness for automorphism schemes of geometric points is not an obstruction to being an Artin stack. For example, Bmun is an Artin stack over mathbfZ even though mun is not smooth over mathbfZ when n>1. Undeterred by this, we'll make a counterexample using BG for an affine group scheme that is fpqc but not fppf.
First, we set up the framework for the counterexample in some generality before we make a specific counterexample. Let S be a scheme and GrightarrowS a S-group whose structural morphism is affine. (For example, if S=rmSpec(k) for a field k then G is just an affine k-group scheme.) If X is any G-torsor for the fpqc topology over an S-scheme T then the structural map XrightarrowT is affine (since it becomes so over a cover of T that splits the torsor). Hence, the fibered category BG of G-torsors for the fpqc topology (on the category of schemes over S) satisfies effective descent for the fpqc topology, due to the affineness requirement.
The diagonal BGrightarrowBGtimesSBG is represented by affine morphisms since for any pair of G-torsors X and Y (for the fpqc topology) over an S-scheme T, the functor rmIsom(X,Y) on T-schemes is represented by a scheme affine over T. Indeed, this functor is visibly an fpqc sheaf, so to check the claim we can work locally and thereby reduced to the case X=Y=GT which is clear.
Now impose the assumption (not yet used above) that GrightarrowS is fpqc. In this case I claim that the map SrightarrowBG corresponding to the trivial torsor is an fpqc cover. For any S-scheme T and G-torsor X over T for the fpqc topology, the functor
StimesBGT=rmIsom(GT,X)
on
T-schemes is not only represented by a scheme affine over
T (namely,
X) but actually one that is an fpqc cover of
T. Indeed, to check this we can work locally over
T, so passing to a cover that splits the torsor reduces us to the case of the trivial
G-torsor over the base (still denoted
T), for which the representing object is
GT.
So far so good: such examples satisfy all of the hypotheses, and we just have to prove in some example that it violates the conclusion, which is to say that it does not admit a smooth cover by a scheme. Take S=rmSpec(k) for a field k, and let ks/k be a separable closure and Gamma=rmGal(ks/k)rmopp. (The "opposite" is due to my implicit convention to use left torsors on the geometric side.) Let G be the affine k-group that "corresponds" to the profinite group Gamma (i.e., it is the inverse limit of the finite constant k-groups Gamma/N for open normal N in Gamma). To get a handle on G-torsors, the key point is to give a more concrete description of the ``points'' of BG.
Claim: If A is a k-algebra and B is an A-algebra, then to give a G-torsor structure to rmSpec(B) over rmSpec(A) is the same as to give a right Gamma-action on the A-algebra B that is continuous for the discrete topology such that for each open normal subgroup NsubseteqGamma the A-subalgebra BN is a right Gamma/N-torsor (for the fpqc topology, and then equivalently the 'etale topology).
Proof: Descent theory and a calculation for the trivial torsor. QED Claim
Example: A=k, B=ks, and the usual (right) action by Gamma.
Corollary: If A is a strictly henselian local ring then every G-torsor over A for the fpqc topology is trivial.
Proof: Let rmSpec(B) be such a torsor. By the Claim, for each open normal subgroup N in Gamma, BN is a Gamma/N-torsor over A. Since A is strictly henselian, this latter torsor is trivial for each N. That is, there is a Gamma/N-invariant section BNrightarrowA. The non-empty set of these is finite for each N, so by set theory nonsense with inverse limits of finite sets (ultimately not so fancy if we take k for which there are only countably many open subgroups of Gamma) we get a Gamma-invariant section BrightarrowA. QED Corollary
Now suppose there is a smooth cover YrightarrowBG by a scheme. In particular, Y is non-empty, so we may choose an open affine U in Y. I claim that UrightarrowBG is also surjective. To see this, pick any yinU and consider the resulting composite map
rmSpecmathcalOrmshY,yrightarrowBG
over
k. By the Corollary, this corresponds to a trivial
G-torsor, so it factors through the canonical map
rmSpec(k)rightarrowBG corresponding to the trivial
G-torsor. This latter map is surjective, so the assertion follows. Hence, we may replace
Y with
U to arrange that
Y is affine. (All we just showed is that
BG is a quasi-compact Artin stack, if it is an Artin stack at all, hardly a surprise in view of the (fpqc!) cover by
rmSpec(k).)
OK, so with a smooth cover YrightarrowBG by an affine scheme, the fiber product
Y′=rmSpec(k)timesBGY
(using the canonical covering map for the first factor) is an affine scheme since we saw that
BG has affine diagonal. Let
A and
B be the respective coordinate rings of
Y and
Y′, so by the Claim there is a natural
Gamma-action on
B over
A such that the
A-subalgebras
BN for open normal subgroups
NsubseteqGamma exhaust
B and each
BN is a
Gamma/N-torsor over
A. But
Y′rightarrowrmSpec(k) is smooth, and in particular locally of finite type, so
B is finitely generated as a
k-algebra. Since the
BN's are
k-subalgebras of
B which exhaust it, we conclude that
B=BN for sufficiently small
N. This forces such
N to equal
Gamma, which is to say that
Gamma is finite.
Thus, any k with infinite Galois group does the job. (In other words, if k is neither separably closed nor real closed, then BG is a counterexample.)