Here's what I'm seeing on my site www.cartmel-bar.co.uk
I installed 1.6 a few days ago, having previously been running the Sparkle release.
On my site there's a small arrow gif that appears in the place of = > before the text "read more" link to the full post.
Except I'm seeing an odd behaviour. All the existing posts from before the upgrade to 1.6 have the icon and render smilies in the posts.
But any post added since the upgrade doesn't feature the smilies.
Why should this be, the same text such as : ) is going into the post. Why wouldn't the smilies appear in those posts too?
Depends on what you upgraded from. I'm not sure when, but at some point b2evolution decided to ship without smilies enabled. In 1.6 you go to your settings tab then plugins subtab and 'turn on' smilies. After that I think you'd have to go back and edit posts that should have had smilies but didn't and check the 'smilies' box, but it might automagically do that for you.
Bottom line is smilies are not on by default, so you turn them on via your settings||plugins tab.