<em> html displayed around new replies in the Replies column

The <em> html tags are showing in the Replies column around the number of new replies.

This is because the html is inserted before the link is created and l() is automatically converting the htmltoentities. To fix this tell l() that there is html in the link.

Change:
$comments .= l(t('%num new', array('%num' => $new)), "node/$node->nid", NULL, NULL, 'new');

TO:
$comments .= l(t('%num new', array('%num' => $new)), "node/$node->nid", NULL, NULL, 'new', FALSE, TRUE);

The last TRUE does the trick.

See http://api.drupal.org/api/5/function/l