Shoutbox

Title says it all. Suddenly, smileys just show up as the text they need.
Even if I go into 'more' on the emotes screen and click on one (ex. :tnt:) , it'll show up in my message box but when I push 'enter', it'll just show up as the text for the code.
If I type in the code for a smiley in the message box, the smiley wont take place of it.
Then if a buddy even goes into 'more' emotes and clicks one, I'll only see the code-text needed to send it.

In the main window go to  Help > Options > Messages and make sure the "Show emoticons" and "show custom emoticons" boxes are ticked.

How long is the conversation in question? If it's too long, Messenger just stops displaying emoticons. It's a known issue.