How do I set a preferred spacing in Outlook for replying to emails?

Just found this behavior (double line spacing) in Outlook 2013 happens only when we try to reply or forward the auto generated mails. The received auto generated mail (in my case) happens to be in double line spacing and that gets propagated to the replies and forward!

In Outlook 2013 this is still a very annoying problem. The solution is to:

• Go to "pop-out" your email in Outlook 2013 so that you are looking at it in full screen (you may not to do need this step in 2007 or 2010 I believe).
• Choose the "Format Text" tab at the top and select the "Change Styles" drop-down near the right end of the ribbon.
• In "Paragraph Spacing" you need to go to "Custom Paragraph spacing". Even the "Compact" option will not do what you need.
• Once the box is open change the Before and After options to "0 pt" in "Paragraph Spacing". Remember to select the "New documents based on this template" radio button too.