Currently when Internet Explorer users compose an HTML message in Web Mail, the Return (Enter) key on the keyboard inserts a paragraph space instead of a single line feed. You are using HTML compose (as opposed to plain text) by default when replying to an HTML message, or if you have started a new message and selected "Color & Graphics" on that screen. This allows formatting the text in your message.
The "doublespace" problem has been reported by a number of users and we intend to get it fixed soon. In the meantime there are a couple of things you can do. The best solution may be to use the Enter key only when you want a new paragraph, and otherwise just allow the compose window to wrap your text automatically as you type. Then it will be single-spaced. Any email viewer your recipient is using is going to wrap the text for them too.
If you need to insert a single line feed, a couple of clever users pointed out on this blog that you can do so by pressing Shift-Enter instead of just the Enter key. That will put in a regular line break instead of a new paragraph. Incidentally, it isn't actually "double-spacing" as some have referred to the problem; if there were simply two line feeds you could backspace off one of them. You can't. It is actually an HTML paragraph tag being inserted.
As far as we know the problem does not occur on other browsers, just Internet Explorer. But it will be fixed soon.