It's not parsing the HTML because your board is apparently set not to accept HTML. If you want it to accept HTML, find this line:
$quiz[description] = bbcodeparse(stripslashes($quiz[description]));
Replace it with this:
$quiz[description] = bbcodeparse(stripslashes($quiz[description], X));
Replace the "X" in that line with the forumid number of one of your forums which is set to parse HTML in posts. That should do it.
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