For some reason all the comments i post with HTML in them seem to come out as blocked even though they aren't, if I click block, and then unblock it renders properly, this happens both with text-only on and off.
Check my comment there. It's possible that's entirely and totally related to that. can you post some screenshots? or post a step by step instructions on how to create the problem?
Did you have "hide comment formats" enabled on your profile or something?
The default format is defined in appg/settings.php
DEFAULTSTRINGFORMAT
The default is Text because Vanilla comes with Text as the only enabled option. There is currently no way to change this option through Vanilla administration.