I think the toggles are supposed to control whether the text goes into one long paragraph or not, so with them all off, you should see:
You are in a room. You can see a teapot. You can go east. This is a test roomHowever, as you say, none of them actually work, which is definitely a bug.
Try this (if working offline). Bottom left, set Filter to show library elements. Search for ShowRoomDescription, then click the copy button at the top right. In the script section, go into code view, and look for a line like this:
desc = ""
Put in a space between the quotes. There are five altogether, so you can control exactly where the blank lines go with a bit of experimenting,