Unwanted markup in $node->body

Hi,

I'm fairly new to theming and I have an issue that has me stumped.

my site was originally the b7 theme, but have added a template.php

I am trying to create a view for the homepage that has some content and then the latest news.

I created a content type and have the right items being displayed.

I made a node-news_item.tpl.php that has:

<div class="node <?php print ($sticky && $page==0) ? " sticky" : ""; ?> ">
  <div class="content">
     <?php print format_date($node->created,'custom', 'F j, Y') ?>   <?php print $content ?>
  </div>
</div>

the problem is that $content is wrapped in a <p> as in:

  <div class="content">
     December 29, 2008   <p><b>The Massachusetts Early Education and Care and Out-of-School Time Task Force </b>has released a <a href="/files/Steps%20Forward%20PowerPoint.pdf" target="_blank">PowerPoint</a> presentation highlighting their recommendations.<b> </b>View the <a href="/files/Steps%20Forward%20PowerPoint.pdf" target="_blank"><b>Steps Forward</b> PowerPoint</a> presentation <a href="/files/Steps%20Forward%20PowerPoint.pdf" target="_blank">here</a>.  </p>
  </div>

even though I have the following in template.php

function B7_node($node, $teaser = 0, $page = 0) {
  if (module_exists('taxonomy')) {
    $taxonomy = taxonomy_link('taxonomy terms', $node);
  }
  else {
    $taxonomy = array();
  }

  $variables = array(
    'content'        => ($teaser && $node->teaser) ? $node->teaser : $node->body,
    'date'           => format_date($node->created),
    'links'          => $node->links ? theme('links', $node->links, array('class' => 'links inline')) : '',
    'name'           => theme('username', $node),
    'node'           => $node,  // we pass the actual node to allow more customization
    'node_url'       => url('node/'. $node->nid),
    'page'           => $page,
    'taxonomy'       => $taxonomy,
    'teaser'         => $teaser,
    'terms'          => theme('links', $taxonomy, array('class' => 'links inline')),
    'title'          => check_plain($node->title)
  );

  // Flatten the node object's member fields.
  $variables = array_merge((array)$node, $variables);

  // Display info only on certain node types.
  if (theme_get_setting('toggle_node_info_' . $node->type)) {
    $variables['submitted'] = t('Submitted by !a on @b.', array('!a' => theme('username', $node), '@b' => format_date($node->created)));
    $variables['picture'] = theme_get_setting('toggle_node_user_picture') ? theme('user_picture', $node) : '';
  }
  else {
    $variables['submitted'] = '';
    $variables['picture'] = '';
  }

  return _phptemplate_callback('node', $variables, array('node-' . $node->type));
}

what am I not getting?