In our forum settings, /forum/admin/boardsettings, we have the Forum Base URL Mask field set to 'http://mydomain.com/forum'. The forum is installed into the 'forum' directory on the web server. When an email notification about new forum posts comes, it contains a link to the corresponding forum post like this:

http://mydomain.com/forum/forum/posts/m1642-Font-issues#post1642

As you can see, the forum directory is used twice in the URL, which makes the URL unusable.

Do I have improper forum settings, or it is a bug in the forum engine that should be fixed on your side?

Your baseurlmask needs to be

http://mydomain.com/ 

not

http://mydomain.com/forum/ 

thats why it is duplicated.