Did you check or uncheck the box next to "Is this HTML?"
If it is checked, then the text will be considered HTML, and in HTML, text is word-wrapped automatically and white space collapsed.
However, if you do not check that box, the text will NOT be considered HTML. Thus no automatic word-wrapping or white space collapsing.
You'll need to insert line breaks in the text. A line break, aka "new line" is a character sequence that tells the software where to break text into lines. In the case of e-mail, a new line is a carriage return followed by a linefeed. Operating systems might have different ideas, such as just a linefeed on UNIX and just a carraige return on Mac, if IIRC.
I whipped up a CGI script that does word wrapping. Copy your text here and submit the form, and it will insert line breaks.
Tabs are characters that are kinda like extra-wide spaces, but the width depends on the software showing the text, so usually its a good idea to convert each tab to a series of spaces instead. However if you need the tab characters, set "Tabs" to "Yes".
The source is available at http://atropos.openvein.org/web/dreamhost/perl/source/wordwrap.pl
Perl / MySQL / HTML CSS