The space/linefeed behavior is implemented according with XSL-FO specification and are collapsed by default.
To prevent collapsing you need to set the following attributes for those template fields that you may want to preserve the spaces/linefeeds:
The template should contain the following snippet in XML View:
<fo:block><xfd:field xpath="/root/Field" fo:white-space-collapse="false" fo:white-space-treatment="preserve" fo:linefeed-treatment="preserve"/></fo:block>
Please see the following links for more information on behavior of white-space-treatment and linefeed-treatment
See also attached sample on implementation.