Yep, editing it with notepad is a "bad idea".
Windows (DOS), MAC, and Unix/Linux indicate the end of a line in different ways, and you generally can't "see" the difference. (if you are interested in the details of this, google has lots of information).
There are a several of ways you can "fix" this, and deal with the problem in the future:
1)Use an editor that lets you work with, and save, files on your computer with nix style line endings. Then, make sure you ftp the file to your space ion ASCII mode. A great "free" editor for Windows that let's you work with DOS,NIX, and MAC line endings, is PSPad. To set the type of line ending for the file, pull-down the "Format" menu and look near the bottom.
2.) Edit the file from the *nix shell with a *nix editor, such as pico, nano, joe, vi, vim, etc. (there are resources explaining this in the DH wiki).
3) From the shell, run the dos2unix program on the file in question.
Any of those options will result in you having a "good" *nix line-ending type file, and the script should then run fine.