Hi Shawn,
Thanks for reporting this bug, of which I was already aware. I have posted a bug report (MDL-26281) for which you can vote and where you will find an easy fix.
Joseph
Fix (for moodle 2.0)
in file lesson/pagetypes/shortanswer.php
around line 80
replace:
foreach ($answers as $answer) {
$i++;
$expectedanswer = $answer->answer; // for easier handling of $answer->answer
$i++;
$expectedanswer = $answer->answer; // for easier handling of $answer->answer
with
foreach ($answers as $answer) {
$i++;
$expectedanswer = s($answer->answer); // for easier handling of $answer->answer
$i++;
$expectedanswer = s($answer->answer); // for easier handling of $answer->answer