This is an issue with Notepad and how it treats carriage feed / line return. This particular issue is why you shouldn't use Notepad to edit config files, Notepad does not respect the conventions of the source format and changes the output. If you edit /etc/exports with Notepad, then save, go to a Unix system and run cat -v /etc/exports you will see the "^M" character all through the file, you should see "$". I have seen this break config files many times. Unfortunately this is common with a lot of Microsoft products.
If you use something like Wordpad(on Windows 7 at least), Notepad++, Textpad, Crimson Editor, etc they will show you the ouput in the correct format without issue. You would have to build a wrapper script to change the Unix CR/LF to the Windows ^M to get Notepad to show the output correctly.