You can't have line breaks in a cell. The workaround is to use a code for the break, then run Find/Change after the merge to change the code into the break you wanted.
Thanks for your prompt reply Peter. That's what I have been doing but was hoping there was a better solution. For example, do you know if Adobe has any future plans of including Excel spreadsheets as option for doing Data Merges instead of CSV or TAB-delimited files?
I don't know about any future plans, and anyone who does would be bound by non-disclosure agreement so they couldn't say.
Data Merge is a pretty basic "dumb" module meant for things like simple labels. For more complex merges you might want to look at one of the commercial catalog plugins.
Ok, will do. For the record, what I am doing is very basic just that the line break makes for disastrous results. :-(