SMF text editor and parser is not exactly the best out there, and it does break more than it should. I would recommend that for more complex output you actually toggle the view (last button on the right, second row) to see exactly what it's being written in as bbcode and correct if needed. In your example, the list was actually broken into a whole bunch of ul groups.
The next "major" version of SMF should address some of these flaws, but it's taking a while to get out beta status. I have considered migrating to phpbb mainly because of the larger community engagement but that's something that would take time to prepare and also would create a whole bunch of issues to solve afterwards given the history of all the data already in the db.
