[SMARTY] problems after upgrading to php5

I have a website that uses smarty that I've inherited.

I just moved it to a new server with PHP5 (up from PHP4 on the old server).
I upgraded smarty to the latest thinking there may be an issue running an
old ver of smarty with PHP5 but no luck.

Now I'm getting weird behavior from Smarty when it creates the pages.

Codes like this:

<table width="100%" cellpadding="0" cellspacing="0"
class="loggedin"><tr><td>
{if $employee}
{assign var="en" value=$employee->name|escape}
{$lng.logged|string_format:$en}  <---- PROBLEM IS HERE
[<a href="messages.php"><b>{if $unread}<font
color="red">{/if}{$lng.unread_messages}{$unread}{if
$unread}</font>{/if}</b></a>]
</td><td align="right"><a href="logout.php"><b>{$lng.logout}</b></a>
{else}
{if $new_pass}
{$lng.enter_new_password}
{else}
{$lng.not_logged}
{/if}
{/if}
</td></tr></table>

No longer seems to work.  I'm very new to Smarty but I think it has to do
with the 'string_format:' part.

The $lng.logged variable is coming from an ini file parsed by the PHP
parse_ini_file() function.
In that file $lng.logged = "<b>%s</b>, is currently logged on"

Error reporting is turned on in php.ini but no errors are reported.

Any ideas where things are going wrong or where I should look? 

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