Colours, limited to the 16 colours as displayed using Alt+K can be used, but images, to my knowledge, can not. Therefore smileys, such as
can't be used, but a text similar smilie, such as (-: can
The difference between $ and $$ is that with $1 it's possible for the script to run even though information from $1 might not be available. Using the $$ forces mIRC to ensure that the information is available, otherwise the code doesn't run.
