I'm sorry that it didn't work for you, Ned. I think it must have been a lit file directly converted from a .txt if it still had all those irritating manual line breaks.
I've had very little trouble with most lit files. Generally I can just put them into BD, assign chapter titles, click the 'insert' tab and select 'insert TOC' and the book is made. So I think that you can hope for less trouble with most future lit files.
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