The problem appears to be that the form "Works Properly" is set up in tables and the form "Does Not work properly" is not. In the former, the tables have their rows all set to Exactly spacing so that when you hit enter nothing changes. That is not stopping new paragraphs from being made, though. New lines are still being added, you just can't see them.
So, the form fields in both are working the exact same way, except in one the returns are being hidden by the table settings and in the other they are not. The returns aren't even hidden everywhere in the the one you say works properly. If you toggle on Show/Hide and hit Enter with your cursor in any of the fields in the "INDIVIDUAL CONTACT FOR M/L" table for example, you will see that this is happening.
EDIT to add:
Actually, technically, the form fields of both aren't exactly the same in the sense that the "Works Properly" fields appear to have character limitations that the other document does not have. But aside from this, the rest of what I said holds true.
