If you've changed the name of the file and it still displays the same, then I'd think the formatting problem you're seeing is within the text file itself. I used to have this happen all of the time with my Kindle. I would create DOC files, have them converted to Kindle format and they wouldn't display the same as they did in Word, sometimes separating the paragraphs by two spaces when I'd only put in one. You might try the same thing with another epub and txt file and see if you get the same results.
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