You have to add the following property in line 143 of htmlarea.js



this.pageStyle = "p { margin:0; }"



After doing this, while composing the mail, it works fine.

But during viewing the mail the same problem persists

I guess you are saying that hitting the enter keys inserts two 
linebreaks instead of one when using the HTML editor? This is the 
default browser behavior, use Ctrl+Enter to insert single linebreaks.

When you create a new message in HTML (rich text) formatting, as 
opposed to Text Only, and you hit the Enter key to start a new line, 
it double-spaces instead of a single space as expected. I do not see 
any way of changing it except to change to the Address format but it 
immediately goes back to the default of double-spaced line spacing. Is 
that any clearer?

I have no idea what you are talking about, can you please rephrase?

New email message in HTML format only double-spaces on Enter key. 
Correctly Single-spaces if switch to Text only or Address formatting, 
but it immediately switches back to Normal and double-spacing.