I figured out what my problem was. It wasn't anything with my code or with IDLE; and the original text file was fine.
The problem is with the latest version of Notepad of all things. For some reason it wasn't showing the line breaks that ARE present in the file. I emailed the file to myself in Gmail then loaded in Google Docs and it displays just fine.
I've heard that MS has been adding XML features to Notepad. Way to take one of the most reliable programs in existence and make it unusable.
Good news is my coding and the book examples are just fine!!