You have only indented the first line in the for-loop, so for each line
in the file you split the line into town and latlong. Then after you
have split the last line in the file you write a new file with the last
result in the for-loop.

What you want is probably something like this:

#!  python

HEADER = "This page displays longitude-latitude information"
SUBHEADER = "City"

for line in open("datafile.txt"):
    town, latlong = line.split('\t')
    f = open(town + ".txt", "w+")
    f.write(HEADER + "\n")
    f.write(SUBHEADER + ": " + town + "\n")
    f.write("LAT/LONG" + ": " + latlong + "\n")
    f.close() 

# end 

/Johan

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