Version:           1.0.1 (using KDE KDE 3.5.8)
Installed from:    Ubuntu Packages

If you have at least one nickname in your list of watched nicknames and a notify message is printed, this message will show up as raw HTML in the backlog and channel log.

So, to reproduce;

1. Add a nickname to your watched list.
2. Have that person go offline and then online again so you get the notification message.
3a. Now look at the log of the channel or person that the notification line was printed in. It should show up as:

[date] [time] |Notify| lt;a href="#somenick" gt;somenick is online (irc.someserver.tld). lt;/a gt;

3b. It shows up like this in Konversation's logviewer as well as in a text editor such as Kate:

[date] [time] Notify <a href="#somenick">somenick is online (irc.someserver.tld).</a>