I found this in Apple's docs:

Note: If your app needs to create executable files that are typically executed in some way other than through Launch Services (shell scripts, for example), you should also specify the com.apple.security.files.user-selected.executable entitlement.
By default, when writing executable files in sandboxed apps, the files are quarantined. Gatekeeper prevents quarantined executable files and other similar files (shell scripts, web archives, and so on) from opening or executing unless the user explicitly launches them from Finder.
If those executables are tools that are intended to run from the command line, such as shell scripts, this presents a problem. With this flag, the file quarantine system allows the app to write non-quarantined executables so that Gatekeeper does not prevent them from executing.

Currently, Textastic does not specify this entitlement. Since it is a sandboxed app, executable files are quarantined by the Mac OS X sandbox when Textastic saves them.

I will add this entitlement in the next update.

Interesting. Can you tell me the exact steps that are needed to reproduce the issue?

Thanks you! I thought that was the problem, I just wanted to make sure :)

I just found this issue in my todo list and wanted to fix it, but the screenshots seem to be gone. Do you still have the screenshots?

This should be fixed in the next update.

The next version of Textastic will allow cut and paste even when the keyboard is not up.

"document.writeln" only creates line breaks in the source code. The browser translates line breaks to spaces if it is not within a <pre> tag. I guess that's the reason why you don't see the line breaks in the browser window. Try to use document.writeln to write contents inside a <pre> tag and you should see line breaks.

You need to add a <br/> tag if you want to see line breaks in the interpreted code.

Also have a look at the answers to these Stackoverflow questions:

http://stackoverflow.com/questions/10247207/why-writeln-not-producing-a-new-line

http://stackoverflow.com/questions/5795843/document-writeln-doesnt-write-to-a-new-line

Do you know that you can tap on the action button and then on "Copy generated HTML" to copy the html code?