Increasing the indenting on a list can separate the text from the bullets rather than moving the bullet points down.

[Walter Gorlitz]

This happens in Firefox 3.6 and 4, Chrome 10, and Safari 5. It does not happen in IE7, IE8, and IE9.

1. Create a list
   
2. Select the text that you want to become the list
   

2.A.1 Click anywhere on the first line of the list
2.A.2 Home key
2.A.3 Shift-Down
2.A.4 Repeat 2.A.3 until last line is selected
or
2.B.1 Click before the list item marker
2.B.2 Shift-click before the first free line after your list.

3. Click on Numbered or Bulleted list button on the toolbar
   
4. Click on the Increase Indent button on the toolbar
   

Compare this to changing step 2 to selecting the list from the middle of the line's text.

This can also be done by selecting a list that has already been created in the same way.

I was able to reproduce this with the nightly build as well.

[Walter Gorlitz]

A video in SWF format of the steps.

[Garry Yao]

WFM by following the procedures, is it possible to provide a reduced test case?

[Jakub Ś]

1. Paste the contents of the attachment in to editor (WYSIWYG mode)
2. Place the cursor before ‘item2’ (on the left of i) and press enter
3. Place the cursor before ‘item5’ (on the left of i) and press enter
4. Select ‘item2’, ‘item3’ and ‘item4’ using shift key and arrow keys
5. For selected text choose Bulleted List and Increase Indent buttons

Result: Text inside li elements is wrapped in paragraphs

NOTE: It is very important how you select items. Lets say that you have selected everything (starting from item2 and going down to item4) except number 4 in item4 (cursor is before 4). Now (still) holding shift key press right arrow two times to select the whole line. Webkit shows it nicely when the whole line is selected (please see Webkit.png).

This is reproducible on FF3, FF4, Chrome and Safari.

[Jakub Ś]

IE9 has a little different problem described in ticket #7744

[Jakub Ś]

Other tickets with same source of the problem but slightly different TC's: #11802, #9901, #14399.

It may be possible that this issue has same source of the problem: #8058