It looks like this may be a documented considerations:

• If you save data from the Design tab to a SmartObject or database and the data is not saved correctly such as with line breaks, you must switch to the HTML tab before saving the data to get the correct results.

https://help.nintex.com/en-US/k2five/userguide/current/Content/Create/K2Designer/Controls/RichText/RichTextControl.htm

Thanks for that. Of interest, the HTML saved, does not include <br> tags, which is good but I still get <br> tags added to the dialog box.

This is hacky but it works. I added a transfer data to a literal, as an “and” rule with Show a message. Basically clears the br tags 50 milliseconds after loading.

<script>setTimeout(()=>{let element = document.querySelectorAll(".message br"); for (index = element.length - 1; index >= 0; index--) {elementmindex].parentNode.removeChild(elementmindex])}},50)</script>