================== UPDATE ======================
FireFox is also doing the same thing now. I have also tried it on separate machines. It is even doing it on this forum editor. So is it a memory issue? Refreshing the page or closing the browser does not fix it.
Here is the steps I used to re-create:
1) Create a new list (it doesn't matter which kind) via the toolbar
2) hit 'Enter'
3) the list element disappears; leaving a <br/>