Gosh,
I do it a little differently, and have never had a problem with the formatting.
What I do is: I copy and paste the story into wordpad, reassign a different font, and then "save as" on my harddrive. I then open it to read in Word. I have never had any problems with any stories from the archives. This doesn't work well with "anniesplace" however, there I get the broken lines and hard carriage returns. I have never run into a story that was too big to copy and paste into wordpad.
Hope this helps or maybe I'm just lucky.
S
