Please use the Editor.DisableAutoFormatting Property.
By default Cute Editor will carefully analyze all of your HTML code and begin correcting all errors automatically. What you get is professionally presented code, properly reformatted and ready for use. If you want to preserve the formatting of existing HTML, you can turn this feature off by setting Editor.DisableAutoFormatting property to "true".
Also can you reproduce the problem in the following link?
asp.net Chat http://cutesoft.net/ASP.NET+Chat/default.aspx
Web Messenger: http://cutesoft.net/Web-Messenger/default.aspx
asp.net wysiwyg editor: http://cutesoft.net/ASP.NET+WYSIWYG+Editor/default.aspx
asp wysiwyg html editor: http://cutesoft.net/ASP
asp.net Image Gallery: http://cutesoft.net/ASP.NET+Image+Gallery/default.aspx
Live Support: http://cutesoft.net/live-support/default.aspx