Some descriptive background first...

 - Single quotes are technically allowed by PHP in array indexes. It is not good coding practice though!
 - The $string variable is an array, and thus technically allows a single quote.
 - If you include a single quote in the index, and then do "local language editing" through the Moodle interface for that, Moodle does not escape the single quote.

Easy fix: escape the single quote in the string *index* as well as in the value.

Simple workaround: Don't edit lang files that suffer from this issue.

At least one contrib module suffers from this problem, which I have detailed here: CONTRIB-1264

The Wimba "Liveclassroom" module. Example snippet from that file: Line 129

----- BEGIN -----
$string['Enable Student\'s microphones at presentation start'] = "Enable Student's microphones at presentation start";
----- END -----

I know the reason why single quotes are used in the string indexes is because they just use the same value for the index and the value. But I'm not saying it is a good idea.

Thanks!