I confirm. Today (2009-04-02) it's still showing the garbled prompt in 
up-to-date Jaunty.
Changing PS1 to '\...@\h:\w\$ ' fixes the "bad" prompt in mc's sub-shell.
Regards,

-- 
mc midnightcommander wrong $PS1 parser in command line input
https://bugs.launchpad.net/bugs/330633
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