Figured something out so I thought I would pass it on. The following code did not work for me.
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set text to ("line1"&Newline&"line2")
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Since it created Line1Line2, the textbox did not move it to different lines because it still thought it was the same word.
This worked for me though:
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set text to ("line1 "&Newline&"line2")
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The space after line1 made the difference.