Check out this awesome free rich text editor. The source code can be found at CodePlex at: RTE (Rich Text Editor) ASP.NET Control
The project page lists the following features
Supported Browsers: Internet Explorer and FireFox
Supported Styles / Formats: Bold, Italic, Underline, Justify, indentations, Plain Lists, Numbered Lists
Supported Commands: Copy, Paste, Cut, Add Hyperlink, Set Foreground Color, Set Highlight Color, Set Fonts, Set Font Sizes, Insert Smiles
Supported Views: Text View, Html View
You can see a demo on this page: http://rteditor.members.winisp.net/