Thanks NEMINI - html was enabled, but as safecracker has pointed out on Dragonfly, there was an issue with hardcoding in viewtopic where the html flag wasn't enabled in the decode_bbcode function - I've now modified that file here.
Now this shows that censor in preview (posting.php) works fine on html and bb code and text, but view (viewtopic.php) is missing html and bbcode url's.
<img src='http://smileys.phried.com/cat/36/36_11_6.gif' alt='ROTFL' border=0 title='ROTFL'>phried.com
<img src='http://smileys.smiley central.com/cat/36/36_11_6.gif' alt='ROTFL' border=0 title='ROTFL'>smiley central.com
and bbcode
[img]http://smileys.smiley central.com/cat/36/36_11_6.gif[/img]
So, safecracker, rather than go down any route just yet, how about we just "debug" the code so it all works, including your fix for viewtopic.
Anyway, it would be handy to fix the censor so this can't happen.
<a href="http://crap*.com">crap* in htmlcode url</a>
crap* in bbcode url