I am using tag_suggest v1.4.0 and it works fine, but I notice when I click on the suggested tag, it automatically puts the word in quotes. Then when you search these quotes seem to be escaped (ie \"test\") and the results are incorrect because it includes the backslashes.

Do you have gpc_magick_quotes enabled? Also, if you install the nightly build only tags needing quotes will be quoted.

I can reproduce this on my local install as well and I have magic_quotes of course disabled.