Pressing Enter Key gives space instead of newline

This happened to me too! If you click on the little paragraph icon that appears on the Home tab, it will show you all the formatting marks and symbols throughout your document. It showed me that I had inadvertently inserted a section break. I was able to delete the break (simply by putting my cursor before the break and hitting delete) and the spacing went back to normal.

I had the exact same issue. It has to do with 'page breaks'. Most likely you did the same thing I did and added a page break by going to the "Layout tab > Breaks > Next Page". For whatever reason, when you hit enter at the end of the page before the page break that you inserted, it'll bring your cursor 2 spaces to the right of your text, but when you start typing it'll appear on the next line. (There are two places where you can add a page break. This only happened to me when I used the "Layout tab" page break, not when I used the "Insert tab" page break option.)

To fix this, I had to open a new document, then copy and paste the text. Make sure not to copy and paste the parts where the page break is located. For the spot where the page break is located, I just manually re-typed the words. Not the best solution, but I couldn't figure out how to remove the page break, so I made a new document instead. Good Luck!

I experienced the very same issue in Word 2013, but thankfully had it resolved. I went to draft view, under the view tab, and noticed that immediately following the words being typed, was a section break. After deleting the section break, everything returned back to normal.