Presently custom_menu::convert_text_to_menu is calling format_text on $CFG->custommenuitems to support multi-lang strings.
Unfortunately this is causing filtering to occur of the strings and with the autolink filter (or what ever that is called) full URL's are being filtered into html links and stuff is breaking.
Setting the filter option to false is certainly one solution but perhaps a better solution is to only filter the name of the item rather than the whole CFG variable.