@robyn_studts - This is an issue with Microstation. We had the same thing (and reprojected using Bentley, not FME). Here is one "work around" I found on the Bentley forums.

Hope that helps.

This is a bug that affects some text nodes, usually text nodes that were placed with an earlier version of MicroStation. It has been fixed in MicroStation CONNECT, but there is a workaround you can use to get it to work in V8i. You need to rotate your text nodes by zero degrees. That doesn't really do anything except upgrade the text nodes to the later standard. The way I did in your test case was to place a fence around everything, select Manipulate Fence Contents->Rotate, select Active Angle as the Method, set my active angle to 0 degrees, then hit a data point to rotate. Nothing visible happens, but now you will be able to reproject the text nodes.

I am having a similar issue using Microstation V8i. I have multiline text in a smallworld database being read. I break the FME Text String into lists using the attribute splitter and setting the determining factor as a carriage return. Then I use an attribute creator to place the lines using igds_text_elements{0}.igds_text_string = list{0} and I used a coordinate extractor to get the x and y's. It brings the text in with all the lines on top of each other in the same text node and places them with the linkage in the wrong place. I have to edit the text in order to get it to move. I use the find/replace text tool and replace all spaces with spaces. This causes the line to drop to split multiline text nodes and the linkage to update to the proper geographic location. However, if I modify the "text style", it loses any carriage returns and drops back to single line text. I can however still change the text properties using the change text attributes tool, but I can no longer use text styles.