image html elements in code blocks or inline code are not turned into entities
Input
<img src="http://images.gameskinny.com/gameskinny/fc8689799b33e2d4c73b816f7b2c26a3.jpg">
asdf `<img src="http://images.gameskinny.com/gameskinny/fc8689799b33e2d4c73b816f7b2c26a3.jpg">` asdf
Output:
<pre class="prettyprint prettyprinted"><code><img src="http://images.gameskinny.com/gameskinny/fc8689799b33e2d4c73b816f7b2c26a3.jpg">
</code></pre>
<p>asdf <code><img src="http://images.gameskinny.com/gameskinny/fc8689799b33e2d4c73b816f7b2c26a3.jpg"></code> asdf</p>
Mmm... I can't replicate this (and have added a unit test to check it). Perhaps another plug-in is upsetting things? Could you try with everything else disabled?
Did you test this as a regular user or moderator/admin? It only seems to be occuring on regular user accounts – admin and moderators end up with the correct output.
Ah yes, you're right.
Something must be happening to it before it reaches wpmarkdown_markdown_to_html() as that function runs independently of the user (and has been verified by a unit test).
My guess at this point that this is related to bbpress strict whitelisting of allowed tags (https://gist.github.com/stephenharris/6078242). Though I could be wrong.