It is caused by the unescaped & (ampersand) chars in the list.
I can't find a good authoritative resource on the MXP specification but I think this issue is at least partially on the SlothMUD side.
Here is a capture of the traffic.

<ESC>[6z puts it into lock secure MXP mode. Until terminated with <ESC>[7z all loose "&" should be encoded as "&" - if I'm reading the spec docs correctly.
Possible resolutions ?
- Sloth can encode plain text ampersands inside lock secure MXP blocks as &
- Sloth can switch to using temp secure mode ( <ESC>[4z ), prefixing the individual MXP tags instead of flagging an entire block, maybe each terminated with <ESC>[3z.
Workaround
- Players can disable MXP (can be toggled on/off in sloth by typing mxp). Most variables/data you would get from MXP can be pulled out of MSDP, which works well in Mudlet, however you don't get the clickable links or menu links this way that you would with MXP. (not a huge loss for most players though I'm betting)
Feature request: MSDP variable that contains room description and roomnvum. I don't think adding it to CHARACTER_LOCATION is ideal since a lot of the time I would want to turn it off to reduce data, but sometimes I want to read the room descriptions - such as when mapping or exploring an area.