Hi! I have a list with a calculated column that shows status indicator (from Christophe) and it works great. I have even added the 

 display-output-escaping="yes" and that fixed the issue inside the list. The web part looks good too, but, when I click the Title link it still shows the HTML. What am I missing?

This is because of how the two are rendered. One is in a list view, which will make the changes, and the other is in this properties view, which doesn't change it. This persists in 2013 as well.

There is jQuery that may solve this for you. Edit the form page and add a CEWP including the code at the link below.

http://sharepoint2013.codeplex.com/releases/view/94782

Thanks for your answer, Andy. Unfortunately, this did not work for me.

I edited the form page and added the code to a CEWP and placed it on top and below the form and it didn't work. Then I put it in a text file and did it the same way, inserting the link to the file and that didn't work. It is still showing the HTML code in the alert email and when I click on the link to the form details.

Any idea what I am doing wrong?

Jamie, this is a late response -- but the proposed solution worked well for me.  You just need to tweak the script to fit your needs.  In my case, I replaced the init "Trigger()" call with "Convert()", and modified the Convert function by replacing ".ms-vb2" with ".ms-formbody" as the object class to apply changes to.