I came across an issue when using clone that my original inline element was being shown when boxy was executed. To fix this:

http://github.com/jaz303/boxy/blob/master/src/javascripts/jquery.boxy.js#L367

should be moved above the previous line so that only the cloned element gets the boxy-content class. ie:

    if (this.options.clone) newContent = newContent.clone(true);
    newContent = jQuery(newContent).css({display: 'block'}).addClass('boxy-content');