I think the first thing to do is to ascertain whether the file is being opened as an XML file: on the menu bar, with the file window focussed, go to Document-->Mode. Make sure it's being treated as XML by selecting "XML".
Then maybe the next thing is to see if any kind of line endings are present in the file: View-->New Line Chars (This will have some effect on formatting.)
And finally verify the XML formatting and style setting to be used for display: Tools-->Options-->Languages-->XML/Text Languages-->XML
I know, all rather obvious, but with the forest of options that SE provides....