From The Internet Explorer innerHTML Quirk:
The innerHTML property of HTML
elements is well-known and widely
used. It is capable of setting the
complete content of an element in one
go, including elements and the like.
As the QuirksMode
tests
have shown, innerHTML is the fastest
way to dynamically change the page
content.
However, innerHTML has a problem in
Internet Explorer.
The HTML standard requires a
transformation on display of content.
All kinds and amounts of adjacent
whitespace are collapsed into a single
space. This is a good thing - just as
an example, it allows me to add a lot
of line breaks into this source file
without having to worry about weird
line breaks in the displayed text.
Internet Explorer applies these
transformations on assignment to the
innerHTML property. This seems like a
good idea: it saves a little time
during display, because if the
in-memory representation is already
normalized, then the browser doesn't
have to normalize whenever it needs to
display the text.
There are exceptions to the
normalization rule, though. Notably,
these are the <textarea>
element,
the <pre>
element and, in CSS-aware
browsers, elements with any value but
normal for the white-space property.
Internet Explorer does not respect
these special cases. The third makes
their optimization a bad idea, because
white-space might change at runtime,
for example through the DOM. In any
case, Internet Explorer will normalize
all assignments to the innerHTML
property.
This is another IE only "bug" (even if it's them who invented innerHTML). In the first link you have solutions to this problem but as Lucas pointed out all seems to point at code by Google which you have no control over.