Colin J. Williams wrote:

You have been very patient. Your text certainly provides the indent, however I see that each "paragraph" is in fact made of standard lines.

I have modified your text to introduce Tex paragraphs - please see the attached file. The purpose of this is to permit me to vary the spacing between paragraphs. With this modification, the indentation disappears.

LyX's "Standard" are normal paragraphs. Every Enter produces a new one.
If you want indented, spaced paragraphs, set Layout->Document->Layout->Separation to "Skip" and write this line to the preamble
\setlength{\parindent}{1.2cm}


I attached an example lyx-file.

In your document you use the AMS article class. I don't know what the special paragraph environment does, but AMS is a math class, and in math you normally don't need paragraphs. So possibly AMS needs paragraphs to be set in this special environment. In all other documents one uses "standard".

regards Uwe
#LyX 1.3 created this file. For more info see http://www.lyx.org/
\lyxformat 221
\textclass amsart-plain
\begin_preamble
\setlength{\parindent}{1.2cm}
\end_preamble
\language canadian
\inputencoding auto
\fontscheme default
\graphics default
\paperfontsize default
\spacing single 
\papersize Default
\paperpackage a4
\use_geometry 0
\use_amsmath 1
\use_natbib 0
\use_numerical_citations 0
\paperorientation portrait
\secnumdepth 3
\tocdepth 3
\paragraph_separation skip
\defskip medskip
\quotes_language english
\quotes_times 2
\papercolumns 1
\papersides 1
\paperpagestyle default

\layout Standard

Now is the time qqqqqqqqq qqqqqqqqqqqq wwwwwwwww dddddddddddd ccc ffffffffffff
 gggggggggg.
\layout Standard

This is a new paragraph which goes on and on.
 eeeeeeeee eeeeeeeeeeee rrrrrr tttttt vvvvvvvvvvvv fffffffffff hhhhhhhhhhhhhh
 bbbbbbbbbbbbbbbbbbb n h jjjjjjjj jjjjjjjjjjjjjjj nnnnnnnnnnnnn mmmmmmmmmmmmmmm
 hhhhhhhhhhh xxxxxxxxxxxx ggggggggg.
\layout Standard

I would like to indent the first word of each para.
 Layout -> Document > Indent set -> would appear intended to achieve that.
 NO LUCK! However, I do get indentation on these
\begin_inset Quotes eld
\end_inset 

paras
\begin_inset Quotes erd
\end_inset 

 if the whole text is made Standard.
 The indents remain in the dvi view.
\layout Standard

Now you have indented paras with space between them.
\the_end

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