Haven't implemented Advanced yet, but are going to soon.
In trying to resolve it I put the managed setting "enableNwayRichText" in on 3 machines but still no luck. This parameter was introduced in 126.96.36.199 accoridng to http://www-10.lotus.com/ldd/stwiki.nsf/dx/Chat_preferences_st852ifr1
Rich text does work for pictures and emoticons (and has done for as long as I can remember), it's just bold / italics etc that doesn't all of a sudden.
I know Advanced introduces N-way file transfers which explains why we can't use the paperclip to send files from within a group chat.
It is not a show stopper, because the vast majority of people do not use them much, but still curious as to why it's suddenly not available.
We are using embedded Sametime 8.5.2IFR1/Notes 8.5.3FP1, I am also using client hotfix #MEWE-8R4FD7