What I believe happened is that you were typing in Grade II, and when actually typing text within the original message, you MUST type in Computer Braille. You should have seen the Computer Braille indicator, which is dots 1-2-4-6, the Computer Braille dollar sign, followed by the letter g and the number 0 right before the text of the original message to indicate a Braille grade change, and the cursor should have also been different by default if you routed it to a part of the Computer Braille portion from what you would see if you routed it to text above the original message (the Grade II portion).
In order to type in a quoted message in Grade II, first surround the text of the quoted message with block markers via the Block Commands Menu, then choose the "Store Block" option from the same menu. Choose a location, and at the "File Name?" prompt, first hit [BACKSPACE with X], [CONTROL with X] until you are told that the new document to be created is of KeyWord text type, then type in a name, hit ENTER, and type Y to confirm creation of the new document. Now, because of the irritating task-switching bug in KeyMail, exit your message with [SPACE with E], [ESCAPE], and hit D to save it in the Drafts folder. Now, switch to KeyWord with [ENTER with BACKSPACE with W], [FUNCTION with 4], and open the document to which you've stored the quoted message. You'll notice English Braille Language indicators surrounding the text, so to get rid of these and have your text displayed in Grade II on the display, surround it with block markers, and hit L from the Block Commands to choose the "Language and Braille Grade" option. Tap ENTER at the "Language? English" prompt. Continued...
