It works fine with RC3, the code you hunt for has changed a little. Instead of looking for
PHP Code:
$bbcode = str_replace(array('>|||)', '<|||)', '"|||)'), array('>)', '<)','")'), $bbcode);
} // end smilies
in functions_bbcodeparse.php, look for
Code:
$bbcode = str_replace(array('>|||)', '<|||)', '"|||)'), array('>)', '<)','")'), $bbcode);
} // end smilies
instead. The php code function on here chops it up a bit.