Try specifying the input encoding as utf-8 and see if that fixes the quote issue. I can't reproduce but I'm setup for unicode as the default encoding.
This sounds like the solution.
As for the big block of text. It's because the text file is one big block of text. If you look at it the file you will see that there is no spacing between paragraphs and they wrap over multiple lines. All without any indentation to start. The only thing I can think of to fix this would be to save as HTML and use that as your input instead of a TXT file.