Having just checked, that seems to be another "funny" with vBulletin.
My understanding of CODE tags is that BBCode within them should be ignored - it seems that vBulletin have decided to do the opposite. I've just checked a v5 vBulletin forum that behaves the same as this one, so it's not the ages of this software to blame.
Out of the box, MyBB and phpBB ignores BBCode in CODE blocks, just showing them as typed, and also don't support NOPARSE tags.
All good reasons to "keep it simple" on forums
