Ah! No that was me not explaining myself very well. I wasn't working on a catablog page, I was working on a normal wp page in draft mode and looking at it in preview mode, and I had comments in there for my own reference, so I guess that's why I got all those nested code tags. Plus I'd been trying to get the html in the page to work properly for hours until I came looking for a solution and found your amazing plugin. So I was proably crosseyed as well. :-) But I deleted the page, tried it again, and it worked perfectly. And thank you!!!!! It's a god send!
The catablog item pages are not updating when I use Fix post or fix page, so I have some missing p's and br's in them. All the actual wp pages and posts have updated, its just this custom post type that hasn't. But just in case I'm missing something obvious, you say theu should be listed under Writing : "Configure New Line Behavior Per Post Type" but I only see fix pages and fix posts there, no custom post types. Should there be a Fix custom post types as well?
thanks for your help, its much appreciated