It literally shows the \r\n? Something has escaped it prematurely or it is being stored improperly in storage. If it shows /r/n, then something has been incorrectly replaced.
If it shows \r\n and $posts represents a direct copy of $_POST, you have magic_quotes_gpc enabled.
So to figure out the problem, can you specify where the $posts variable is populated from? Oh and clarify as well if its /r/n or \r\n.