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I have set Word Wrap as follows:

Configure > Preferences > Document Classes > Default > Word wrap long lines

With Word Wrapped Text: Save with no breaks in lines

selected. However, when I open files with long lines, Word Wrap does not apply to the file, and I have to set it manually by using the toolbar button.

Is there another setting that might be interfering with this?

The Default document class picks up all file extensions which are not specifically included in another class. If your files end in ".txt", you'll have to make those changes to the Text document class.