One thing about the lines per page... if you set it to 0 then you get no pagination whatsoever and so don't get the new page character... I have a 140,000 line text export file that I had the same issue on and this solved the problem for me.
One potential reason for blank lines in text output is where there is a suppressed record. The text output produces a blank line, rather than removing the line completely.
Can't guarantee either of these will fix your issues, but might be a sign post to the right direction...
Thanks,
Andrew