Support for multilanguage sites, Internationalization (I18N)

[yojoe]

While using i18n v3.0.2 with custom link structure %language%/%parent%/%slug% every time I try to insert a link I get a %language% inside the url, which isn't being parsed into language abbeviation.
One of example links from a demo page of mine theme looks like this:

<a href="http://getsimple.wujitsu.pl/bluebusiness/%language%/news/">news</a>

and I have to change %language% manually.

Is this caused by specific GS config (what additional info should I provide ?), or did somebody encounter similar behaviour ?