We’ve been having the same problem the last few weeks, possibly since the upgrade to 3.14.4, but maybe before then too.
I’ve recompiled htmltidy from the latest CVS on our server, but was still getting the same in the apache error_log file. Anyway, I’ve solved it by adding the missing hyphen from the command line in the source code 
Bug report filed: http://bugs.matrix.squiz.net/view_bug.php?bug_id=2625 with proposed patch.
PS - somebody may want to check scripts/system_integrity_run_tidy.php is running with the same parameters as the wysiwyg run (it's not currently)
It's a different commandline than the one in fudge/wysiwyg/plugins/html_tidy/html_tidy.inc.
I've updated my html_tidy.inc and things are back to normal. My only issue now is that tidy is validating the news items but I get no icon on the right to say this content has been validated like I do editing for Standard Pages or for Type Formats etc.
If you are on 3.12.8, 3.14.4 or 3.16.0, you will have to modify fudge/wysiwyg/plugins/html_tidy/html_tidy.inc
near line 158
$command = "/bin/echo ".escapeshellarg($html)." | $path_to_tidy -iq -preserve-entities yes --show-body-only y --show-errors 0 --show-warnings 0 --wrap 0 -asxml --quote-marks 1 --word-2000 1 --force-output 1 --char-encoding ".$tidy_char_set;
Change
-preserve-entities yesto
--preserve-entities yes(add 1 more leading hyphen)
edited to add:
This will be fixed in next release. Also note that you will have to recompile tidy with the latest source code (at least 11 February 2007 release) to use the newly added preserve entities option
Can we make sure this has been added to both the Installation and Upgrade instructions on the Matrix website?
That's a job for… LUKE WRIGHT!
(thanks Luke)
[quote]If you are on 3.12.8, 3.14.4 or 3.16.0, you will have to modify fudge/wysiwyg/plugins/html_tidy/html_tidy.inc
near line 158
$command = "/bin/echo ".escapeshellarg($html)." | $path_to_tidy -iq -preserve-entities yes --show-body-only y --show-errors 0 --show-warnings 0 --wrap 0 -asxml --quote-marks 1 --word-2000 1 --force-output 1 --char-encoding ".$tidy_char_set;
Change
-preserve-entities yesto
--preserve-entities yes(add 1 more leading hyphen)
edited to add:
This will be fixed in next release. Also note that you will have to recompile tidy with the latest source code (at least 11 February 2007 release) to use the newly added preserve entities option[/quote]
So, if I want to change this on our system, when I edit that file, do I have to be logged in as the matrix user? Or can I be root?
You need to be logged in as someone who has write access to the source files. Doesn't matter who it is.
Thanks Greg, got it working. I just get a little nervous when working with matrix stuff in the cmd line.