Well a quick glance at the plugin file, rich-text-widget.php, and I was able to find the problem.
Starting on line 124 it has:
if ( current_user_can('unfiltered_html') )
$instance['text'] = $new_instance['text'];
else
$instance['text'] = wp_filter_post_kses( $new_instance['text'] );
return $instance;
I guess when I created my admin account for this particular blog I missed a setting some where to allow unfiltered HTML.
For now I just commented that out and it works fine. Ideally I need to go into WPMU and give my administrator account for that blog the right permissions.
//if ( current_user_can('unfiltered_html') )
$instance['text'] = $new_instance['text'];
//else
// $instance['text'] = wp_filter_post_kses( $new_instance['text'] );
return $instance;
cheers
