Generate HTML vs. encoded HTML

Currently our version of the editor is generating encoded HTML instead of HTML.  We're getting this:

<p> This <strong>is a test of </strong>what is being saved.</p>

instead of this: 

<p>&nbsp;This <strong>is a test of </strong>what is being saved.</p>

and we've set FCKConfig.HtmlEncodeOutput = false; 

Is there something else that needs to be set to make this happen?  I've looked through the documentation and I don't see anything.