I use ERT in Lyx 1.3.7.
I do not have 1.3.7 to test right now but AFAIK, ERT in 1.3.7 output par1 par2 as par1 par2 so you will have to use Ctrl-Enter (\newline) to enter paragraphs if you want output par1 par2 Any, lyx 1.5.0 is not far away from being released so you may want to try the new listings inset of it. Cheers, Bo
