The new version of Sigil doesn't automatically "beautify" code. What you're seeing is how the code is actually presented in the files. You can always manually Prettify the code by using Tools (from the menu)->Reformat HTML->Mend and Prettify All HTML Files. That will present the code in more of a format that you're used to seeing with the older version's Pretty-Print. You can also right-click on the Code View widget and select Reformat HTML from the context menu and Mend (or Mend and Prettify) the current file-only if you wish.
As for the error you're getting upon opening, I couldn't accurately say without seeing the actual code. My guess is that the older version of Sigil is simply fixing the error in the background with no warning message, where the new version is telling you about it.
EDIT: and what KevinH said.
