P2 title link doesn’t reflect permalink settings

Whilst the ‘permalink’ link in the homepage correct links to how I’ve set my WP permalink settings (/%category%/&postname%/), the actual title itself links to a “myblog.com/?p=xxx” type thing.

I believe the offending code is in the functions.php:

function prologue_the_title($before = '<h2>', $after = '</h2>') {

	global $post, $looping;
	$t = $post->post_title;

	if($looping == 0)
		return $t;
	$pos = 0;

	if(get_option('prologue_show_titles') != 1)
		return false;

	$post->post_content = trim($post->post_content);
	$post->post_title = trim($post->post_title);
	$post->post_title = preg_replace('/\.\.\.$/','',$post->post_title);
	$post->post_title = str_replace("\n", ' ', $post->post_title );
	$post->post_title = str_replace('  ',' ', $post->post_title);
	$post->post_content = str_replace("\n", ' ', strip_tags($post->post_content) );
	$post->post_content = str_replace('  ',' ', $post->post_content);
	$post->post_content = trim($post->post_content);
	$post->post_title = trim($post->post_title);

	if( is_int( strpos($post->post_title, 'http') ) )  {
		$split = str_split( $post->post_content, strpos($post->post_content, 'http'));
		$post->post_content = $split[0];
		$split2 = str_split( $post->post_title, strpos($post->post_title, 'http'));
		$post->post_title = $split2[0];
	}
	$pos = @strpos( $post->post_content, $post->post_title );

	// these are for debugging
	/*
	error_log('content '.$post->post_content);
	error_log('title '.$post->post_title);
	error_log($pos);*/

	if( (false === $pos or $pos > 0) && $post->post_title != '')
		echo (is_single()) ? $before.$t.$after : $before.'<a href="'.$post->guid.'">'.$t.'</a>'.$after;
}

… which is what is called for writing the title in entry.php, but I don’t have the skills to correct it.

Any help? Thanks!