The following line in the phpbb2 smiley text file does not translate into a smiley graphic in the chat screen, it displays as the text characters :-"
If you replace the " with another character (I used tilde) all works fine. Sounds like escaping to me.
Problem exists in FF3 and 4, ie6 and 7. It was in about in pre 1.x releases and 1.0 and in latest 1.3
Alleycat