Cannot change template or code will show in email

We tried editing the template code for the subscriptions.module outgoing mail, but as soon as we did so, the outgoing emails showed the source code (just like we see in the configuration window) instead of the intended text.
It was not a coding error on our part because reverting to the original coding didn't fix the problem.

The only way to fix the problem was to delete everything from {mail_edit} so that the subscriptions.module default would be used. As soon as we edit, the new template gets saved in {mail_edit} and the mail gets the code as saved there.