I have the same problem. Its even wierder. When I opened a copy of the strings.txt file the first time, it read normally, I could edit it fine, everything seemd ok. When I came back to it later, it had each letter seperated like you are seeing. You can't edit it when it looks like that, just doesnt work.
So, eventually I reinstalled the game. This was after I wiped my hard drive clean. Guess what I saw the first time I opened the strings file? Yup, each letter seperated by squares.
Anyone have any ideas at all?