Notepad still does not recognize UNIX newlines. But you already knew that.
Every time an intern looks at the problem and says, “Shucks, I could commit this one line fix for that,” a Windows product manager springs out from behind the desk to say, “Never! Not in a million years!”
I saw the issue first while trying Slackware, probably in 1996-7. Latest workaround noticed: On Windows 7 when you run the edit command in a Power Shell to open a UNIX file, you can just save it again. It’s like running unix2dos. Then you can edit the file in Notepad. YMMV, but it seemed to work for me.