Enabling excerpts makes the post list show excerpts and it works with manually created excerpts so they can show html. If a manually created excerpt exists it does not automatically generate a plain text one in the post list it uses the manually created one.
The blog post detail must show the full post otherwise they would never be able to ready anything except the excerpt. The read more link goes to the full post so they can read the full post.
Are you using the latest version of mojoPortal?