Visual Editor Issue

Hello,
I’ve seen this problem posed throughout the forum, but have yet to find a solution, so I thought I would post this issue again.

The issue:
If content is created initially in the visual editor – no line breaks or paragraphs are created in the published version (although <b>, <em>, and style tags appear properly).

For the content to appear correctly formatted the tags must be added through the text editor and immediately saved. If I toggle back to the visual editor paragraph and break tags will disappear.

Notes:
1) Only writing content in the text editor is not a solution as it is not my site and the owner does not know html.

2) I do not have this problem with other WP installs (usually content created in the visual editor appears properly coded in the text editor and publishes with correct formatting). I also normally have no issue with toggling between visual and text.

Question:
How can I get content created in the visual editor to publish with correct formatting?

What would cause this problem?

Example:
http://www.vcmi.net/2013/07/26/illinois-muni-green-lights-commitments-findaily/