I have had the self same problem with Microsoft Office Starter since I bought this new Dell laptop last December.  Everything I have typed has been in double line spacing and I got to the point where I was about to download the latest version of Microsoft Works, which was on my old laptop, and which I much preferred.  I finally cracked it yesterday when I altered the button along the type which says AaBbCc no 
spacing and hey presto it worked.  So you have my every sympathy, you are not stupid at all.
Busybod