Worst case scenario, you'd need to encode the carriage returns in the text file to be LF+CR, but this is almost certainly an encoding problem where Explorer can't tell which encoding you're using. What program did you use to create the text file? Make sure it's saved as "UTF-8" for the highest level of compatibility, though "Windows-1252" should work as well.
You could also have a case where your web server is incorrectly identifying the encoding in the HTTP header. If this is being served by vanilla Apache then that shouldn't happen (it shouldn't identify the encoding at all and leave it to the browser to decipher), but other servers, modules, and server scripts might include an encoding.
The one place I'm fairly certain isn't the issue is your <object> tag, though you might want to give a specific height in pixels instead of "100%" just to be certain. A % on height is not allowed in the spec, but it's generally Explorer who'd be happy to show it and other browsers who would reject it. A % on width is in the spec and is not the source of the problem.
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