“Thumbnails for Excepts” strips formatting

I have “Thumbnails for Excerpts” and “Advanced Excerpts” installed. I wanted the latter so I could include formatting on my post excerpts. However, when I activate “Thumbnails for Excerpts”, my excerpt formatting disappears. Is there any way to get around this, or is there some other way to get both formatting and a thumbnail to show up for excerpts?

http://wolfdogrescue.net/wordpress/category/adoptables/

Right now Thumbnails is deactivated.
I also tried using wordpress’s built-in “Post Thumbnail” option to load a thumbnail, but nothing shows up next to my excerpts even though the posts have thumbnails successfully loaded.