I have this issue also with all photobucket issues.
It can't handle a space (or escaped %20) in link urls or image urls. If the image names or photobucket folder has no spaces the links work as normal. A replace function could be used to rewrite urls but i have a feeling it's a core function in the software that's messed up and is rewriting the urls wrong in the first place and writing them in plain text??
Server specs (Server OS / Apache / MySQL / PHP / DragonflyCMS):
Dragonfly 126.96.36.199 CVS
I know and I reported it earlier. Doesn't appear to affect all sites, so it is DF version, theme. or ??? dependent.
My very unofficial fix which works for me is to comment out the 2 lines in nbbcode.php which handle actual spaces in the URL. It's ok as it still leaves the code which handles %20 which is what you need for photobucket etc.