waterworks2 on "WP adding domain before external URL's creating wrong link"

WP seems to be adding the website's domain before each external URL.

I only have a simple theme installed with no plugins installed.

Example:

My external link:

<a href="http://www.website.com">Click here</a>

but the actual URL when you click on the link is:

http://www.mydomain.comhttp://www.website.com

Any idea what this could and how I could potentially fix the problem? Seems to be happening to all external links.