you are putting it in
:results output latex though, so it won't be changed on export. The contents of that block will be used verbatim I think in the latex export. Maybe you can change latex to raw instead. Then the org syntax will get converted to \textbf.
Otherwise, I think you have to put the latex markup in the output.
I still think it is a bug though, *step3:* does not act like a headline, and isn't valid headline syntax even at the beginning of a line. I don't think it should be getting escaped here.
John
-----------------------------------
Professor John Kitchin
Doherty Hall A207F
Department of Chemical Engineering
Carnegie Mellon University
Pittsburgh, PA 15213
412-268-7803