• You could have a browser issue so try changing your browser settings, refreshing the page, or clearing the browser cache and cookies - instructions for specific browsers.
• Note that when you make adjustments to your browser settings -- changing privacy settings, deleting cookies or increasing security -- you will need to close your window and restart the browser before those new settings become effective.
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• If it’s not up to date then this is where to download and install the latest version of flash.

(2) Have you increased the size of the post and number of lines in it?
Settings > Writing

(3) The theme is coded to provide double spacing between paragraphs. You will get double spacing between paragraphs in every theme here of which I'm aware. The only way to avoid it is to hold the SHIFT key down when you hit Enter at the end of the paragraph.
See also:
http://en.support.wordpress.com/writing-and-formatting-poetry/
http://wpbtips.wordpress.com/category/space-between-paragraphs/

Also why does space bar give you double space when in Visual mode but single in html mode. How can I get single space in visual mode?