mIRC tries to use the part after the colon as the command, so in reality the parser looks at it like this:
Popup entry: "Settings $readini(C"
So it obviously does not work. I wouldn't exactly call it a bug, since it is known that a colon delimits popup entries and their respective commands.
Khaled could of course look if the colon is inside an identifier - it's not that I don't want this problem fixed - I just don't see it happen as it might raise other problems.
A way around it is of course using a custom alias to do the $readini work