Text handling 'just' changed in Calibre 7.38, so the instructions on how to handle this are slightly different based on the code you're using. 7.38 just added an 'auto' mode, which should work, if it's not, go into the text input options and choose 'block'.
If you're using 7.37 then the defaults should match your book. Did you change from the text input defaults? You would need the 'single line paragraphs' option disabled.
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