If the output of a parser function or magic word begins with "*", "#", ":" or ";", it will be parsed as a list item even if it's not actually at the beginning of a line.
This bug has been observed on both 1.16.1, current wikimedia-deployment and 1.18-svn. It can be easily reproduced by parsing e.g. "foo{{plural:1|*bar}}", which should yield "foo*bar". Instead, the string gets incorrectly parsed as "foo<ul><li>bar</li></ul>".
Another way to observe this bug (and the context in which it was first noticed) is to visit a nonexistent page with a leading asterisk in its title: the {{PAGENAME}} magic word in the noarticletext message also triggers this bug if its output begins with an asterisk.
Version: 1.18.x
Severity: normal
URL: http://www.mediawiki.org/wiki/*foo