There is something wacky going on there... let's try this... let me give you my js code to paste into that js file and give this a run... I created a js so that I could update the PowerCMS even before I deploy it so it would be exactly the same as the old PowerCMS toolbar but with the new HTML editor.
Open the file, "contents_update_ContentValue1.js", then get rid of everything in there and paste this to use instead:
// Custom configuration for iRite
FCKConfig.XMLFullName = '(custom)';
FCKConfig.XMLFileName = '(custom)';
FCKConfig.SkinPath = FCKConfig.BasePath + 'skins/silver/'; // relative to fckeditor/editor/fckeditor.html
FCKConfig.DocType = '<!DOCTYPE html PUBLIC "-//W3C//DTD XHTML 1.0 Transitional//EN" "http://www.w3.org/TR/xhtml1/DTD/xhtml1-transitional.dtd">';
FCKConfig.AutoDetectLanguage = true;
FCKConfig.DefaultLanguage = 'default';
FCKConfig.StartupFocus = false;
FCKConfig.FullPage = false;
FCKConfig.BaseHref = '';
FCKConfig.DefaultLinkTarget = '_self';
FCKConfig.ToolbarSets["Custom"] = [ ['Source','DocProps','-','Save','NewPage','Preview','-','Templates'], ['Cut','Copy','Paste','PasteText','PasteWord','-','Print','SpellCheck'], ['Undo','Redo','-','Find','Replace','-','SelectAll','RemoveFormat'], ['Form','Checkbox','Radio','TextField','Textarea','Select','Button','ImageButton','HiddenField'], ['Image','Flash','Table','Rule','Smiley','SpecialChar','PageBreak'], '/', ['Bold','Italic','Underline','StrikeThrough','-','Subscript','Superscript'], ['OrderedList','UnorderedList','-','Outdent','Indent'], ['JustifyLeft','JustifyCenter','JustifyRight','JustifyFull'], ['Link','Unlink','Anchor'], '/', ['FontFormat','FontName','FontSize'], ['TextColor','BGColor'], ['FitWindow','-','About']]; /* Toolbar end */
FCKConfig.ForceStrongEm = false;
FCKConfig.FormatIndentator = ' ';
FCKConfig.EnterMode = 'p';
FCKConfig.FillEmptyBlocks = false;
FCKConfig.FormatOutput = false;
FCKConfig.FormatSource = false;
FCKConfig.IncludeGreekEntities = false;
FCKConfig.IncludeLatinEntities = false;
FCKConfig.ProcessHTMLEntities = false;
FCKConfig.ProcessNumericEntities = false;
FCKConfig.AdditionalNumericEntities = '';
FCKConfig.ForcePasteAsPlainText = false;
FCKConfig.CleanWordKeepsStructure = false;
FCKConfig.EditorAreaCSS = ''; // relative to fckeditor/editor/fckeditor.html
FCKConfig.BodyClass = '';
FCKConfig.StylesXmlPath = ''; // relative to fckeditor/editor/fckeditor.html
FCKConfig.ManagerEnabled = true;
if (true) {FCKConfig.Plugins.Add('kfm');}
Brian