You must use URL encoding in your configuration file for it to correctly function.
If you use our installation tool then your output code is already correctly encoded, if you haven't used install for a while you may need to reinstall.
You do not need to have all of your CheatServe files properly URL encoded, it is only necessary in URL variables and the config.php variables, for example:
include 'http://www.cheatserve.co.uk/?url=' . rawurlencode($encoded_variable);
or,
$variable = '%3Cp%3E'; // Is a <p> tag
alternately,
Use rawurlencode() in your cheatserve.php, see the source code page for more.