It is a kind of bug in that mIRC recognizes the /else as a command but not as a statement. Also there's a bug in the script editor - it incorrectly indents the lines if you use a multi-line else, but indents correctly with a single-line else.

eg.
Code:
on *:HOTLINK:*:*:{
  if (*a* iswm $1) {
    echo a is in it
    } else { [color:orange]<- Still indented[/color]
    echo a is not in it
  }
}

on *:HOTLINK:*:*:{
  if (*a* iswm $1) {
    echo a is in it
  } else echo a is not in it [color:orange]<- Correctly indented[/color]
}

Spelling mistakes, grammatical errors, and stupid comments are intentional.